Retirement planning and biological age testing

How old are you, really? For about $300, several companies will tell you how old you appear to be based on your DNA.

It is still very early days in “biological-age” technology, which is now packaged in at-home test kits, complete with cheek-cell swabs that are sent to labs and analyzed. Testing companies use chromosomal measurements to get a general picture of the physiological age of their clients.

The technology could shape retirement planning, as biological-age estimates can be significantly higher or lower than one’s actual, or “chronological,” age. The future of financial planning could use such data to guide how much clients will have to save and when they should ideally retire, if at all, given how long they are likely to live.

“It will be a long time before we can expect clients to submit blood and cell samples for testing, but we can immediately improve mortality estimates by asking a few simple questions [about] current health, family health, history and smoking.”

Vince Clanton, Principal, Chancellor Wealth Management

“The tests are getting better … It’s only a matter of time before this spreads to insurance companies or financial services companies generally,” said Dr. Robert Pokorski, a consultant who has previously worked as a medical strategist for several big insurance companies. “The tests don’t have to be perfect, but they have to offer some advantage.”

That advantage could be lower rates on insurance, for example. But more generally, testing could alert someone that their body is aging faster than they realize, meaning that they should assess their habits to help improve their health.

Conversely, a test could show that someone is younger, biologically, than their actual age shows. In that case, retiring early might not be a great idea. 

’65’ ITSELF SHOULD BE RETIRED

Improvements in longevity and the understanding of the aging process raise questions about the conventional retirement age of 65. That number was floated nearly 140 years ago by German Chancellor Otto von Bismarck, and it was a departure from the prior standard retirement age of 70 in that country, according to the U.S. Social Security Administration.

Over the past 100 years, life expectancy in developed countries has skyrocketed. In the U.S., it is currently 78.6 years, up from about 54 in 1920 and just 47 years in 1900, according to data from the Centers for Disease Control and Prevention and the University of California, Berkeley.

“Productivity of labor has increased pretty dramatically in old age, but people still take it as a given, that retirement paradigm, where you have to retire or are entitled to retire at age 65,” said Alex Zhavoronkov, CEO of Deep Longevity. Today, with advances in medicine and technology, he said, “your quality of life is better than the queen of England’s was 100 years ago.”

“Longevity is one of the biggest risks clients face in planning their retirement. Most clients tend to underestimate their longevity … We work with a company called Genivity that produces an assessment called HALO, or Health Assessment and Longevity Optimizer. By asking questions about a client’s family background, current health and lifestyle habits, HALO is able to produce probability estimates for various life expediencies … As it relates to longevity, if planners don’t use tools like this, they run the risk of not planning properly for longevity. Using population averages simply is not enough anymore.”

Learn How to create a longevity plan here.

Todd Curry, Wealth Manager, Second Half Strategies

Advances in cancer screenings and treatment are making it difficult to predict how long a person who is 40 today will live, he said. That creates a dilemma for insurance companies, which have limited means of covering the risk that their clients will live much longer than they can predict, he said.

Combined with a retirement age that hasn’t really budged since the Social Security system began in 1935, that spells trouble for the system, for financial services companies and for individual families that could go broke paying for relatives who outlive their savings, Zhavoronkov  said.

“Many countries are on the verge of bankruptcy because of the aging population,” he said. “It’s a problem for every one of us, because it’s the biggest curse for the economy.”

“I don’t think that getting into biological-age testing is necessary for retirement planning. Generally, we would ask the client if longevity is in their family, and, if so, we plan to age 100-plus. If not, we still try to plan to age 90-plus.”

Michael Whitman, Managing Partner, Millennium Planning Group

Simply having people stay in the workforce longer is viewed as one option, and it has the side effect extending people’s lifespans.

“If the rate at which the productive [working] age shifts to the right is faster than the rate at which the maximum life shifts to the right, then the economy will grow,” Zhavoronkov said. “People who are working are [also] more likely to live longer than those who retire.”

The “deep aging clocks” Zhavoronkov studies are a more comprehensive measure — they incorporate data from various sources, including facial images, blood tests, microbiome and survey questions. 

“The more we know about the frailty and the biological age … the better we can design a personal retirement strategy,” he said. “Governments need to switch from statutory retirement norms to [those] that are based on aging clocks.”

COVID-19’S EFFECT ON AGING

It is hard to find any silver linings in a pandemic that has killed about 1 million people globally. Many people have been hit with economic crises and are delaying retirement out of necessity. 

A projected 55% of households are facing a high risk of running out of money in retirement, up from 50% before the pandemic, as a result of the spike in unemployment, according to a report from the Center for Retirement Research at Boston College.

But if more people end up staying in the workforce longer, voluntarily or not, that is likely to result in longer lifespans, longevity researchers said.

“It cannot be overstated — you have tremendous improvement in cognitive ability if you continue to work,” Pokorski said. Many people say they plan to use retirement as a time to learn new skills or take college courses — but that often doesn’t happen. More often, retirees with good intentions spend more time than planned in front of the TV, he said.

Staying happy and healthy past 70 requires a handful of healthy habits, which Pokorski summarizes with the acronym AGELESS: Attitude, good medical care, exercise, lifelong learning, eat healthy, sleep and socialization.

Working longer hits several of those areas, though there are a few studies that show that extended careers can be deleterious to one’s health, he noted. Following healthy habits and having a strong social network can help people extend their “Goldilocks” years — those in which everything is just right, he said.

“A big one is social engagement — that overwhelms almost everything else,” Pokorski said. “If people are going to continue working longer, they may have a longer life expectancy.” 

PANDEMIC’S EFFECT ON DEATH RATE, PRODUCT PRICING

To date, the pandemic has contributed to a U.S. death rate that is 15% higher than average, said Douglas Anderson, founder of Club Vita, a firm that does longevity-risk consulting for pension plans.

“That is bittersweet news for pension plan sponsors,” as it could provide short-term relief to underfunded systems, he said.

The same could be true for the Social Security system, though the effects might not be clear for years.

“While general health is the dominant factor in longevity (think life insurance underwriting), people die in accidents, get cancer, etc. Our software generally presents the lifespan of a male at 92 and a female at 95. Clients are free to ask us to illustrate different lifespans if they choose, based on their family history and their health. The important thing as planners is to make certain that the client is prepared for the end of their life, whenever that occurs.”

Harold Evensky, Founder, Evensky & Katz / Foldes Financial

And there could be long-term consequences that will emerge, Anderson said. For example, social distancing has kept some people from seeking preventative care and routine testing that normally would help detect cancer and other diseases early, he said. Conversely, people have become more cognizant about hygiene, which could improve long-term health outcomes.

“We’re still trying to figure out whether those are net positive or net negative,” he said. Understanding the likely effects will help determine annuity pricing in the future, for example, Anderson noted.

But currently the impact of COVID-19 is uncertainty, said Jennifer Haid, CEO of Club Vita. 

“Uncertainty creates risk, and risk creates extra charges” for products like annuities, she said. 

TESTING FOR RISK

It’s early days in biological-age testing, which could provide more data to help financial service providers and individual investors assess risks in the future.

“It’s an interesting technology,” Haid said. “It’s a way to bring more information to the equation.”

Biological-age and genetic testing have come down in price, but the case to use them is not always clear, Anderson said.

“The issues about using this for insurance or financial planning purposes are a mixture of personal taste and whether you think this is ethical or not,” he said. 

People should be prepared to receive bad news, as they can find out they have a hereditary disease, he said. 

“You will be well-advised to have a genetic adviser with you when you got the results,” he said.

Anderson, 55, said he is hoping to get a biological-age test for Christmas. 

The results of such tests aside, there are steps people can take today to help prepare themselves for old age, he said. 

“I would recommend learning a second language,” said Anderson, who is studying French. “The best thing that you can do for your mental well-being to minimize the risk of dementia … is to be bilingual.”

Related Topics: Client Servicing, Longevity, Retirement