Jennifer Lea Reed
Jennifer Lea Reed
PARTING SHOT
Could Retirement Last 60 Years?
Advisor Sal Capizzi fears the day when it will be common to see three generations of clients living in retirement.
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S LONGEVITY INCREASES, IT’ S BECOMING MORE COMmon that a client retiring at 65 has a parent or parents also in retirement in their late 80s.
If we take a small, dystopian leap forward into the future, scientists say medical advances could result in three generations retired in a single family— one at 65, one at 85 and one at 105. All mobile, all healthy.
This is one of Sal Capizzi’ s greatest fears.
“ The industry is totally unprepared for what the breakthroughs in longevity are going to mean for financial planning,” says Capizzi, the executive vice president at Dunham & Associates Investment Counsel in San Diego.
Capizzi has been following the genetics and aging studies of David Sinclair, author of Lifespan: Why We Age— and Why We Don’ t Have To. It’ s a Sinclair premise that within the next 50 years it’ s not going to be uncommon to see people living to be 120 to 130 years old. Taking that message to heart, Capizzi published his own white paper,“ Is Our Industry Prepared for Retirees’ Longer Lifespans?”
“ What aging scientists are working on is having really vibrant people living to be that old,” Capizzi says.“ There could be a scenario where a new retiree is 70, her parents are 100 and her grandparents are 130. And in that scenario, what’ s missing? Inheritance.”
An inheritance, while it’ s not often most of a client’ s assets, can still give middle-class Americans a strong bump for their asset accumulation. Retirement is more difficult if they don’ t have it, Capizzi says.
He didn’ t have to look far to find a personal example that hits close to home.
“ There could be a scenario where a new retiree is 70, her parents are 100 and her grandparents are 130. And in that scenario, what’ s missing? Inheritance.”
— Sal Capizzi Executive VP, Dunham & Associates
Investment Counsel, San Diego
A 65-year-old friend of his has a mother who is 102 and mobile.
“ Now he’ s taking a look and he’ s saying,‘ OK, I have my retirement that I have to deal with. But I also have my mom, and I have my mom’ s medical expenses.’” Capizzi adds that the mother’ s entire nest egg is the survivor benefit from Social Security.“ So basically, he’ s now paying for her retirement. And if he decides to retire now, he’ ll be paying for his and hers. And he’ s not sure he can afford that.” And that’ s just two generations.“ With scientists betting on humans eventually living to up to 150, this is not science fiction,” he adds,“ but may be an approaching reality that demands new planning strategies.”
To solve for some of the financial challenges that go along with multigenerational retirements, Capizzi examined various portfolio allocations for different time horizons and found that portfolios with overly conservative allocations could be just as damaging to portfolio longevity as poor market returns early in retirement.
Two concepts jumped out at him. First was the retirement investment paradox where a client has conflicting choices continued on page 62
64 | FINANCIAL ADVISOR MAGAZINE | APRIL 2025 WWW. FA-MAG. COM