Excerpted from Does This Make My Assets Look Fat? By Susan L. Hirshman.Copyright © 2010 by the author and reprinted by permission of St. Martin's Press, LLC.
Why have these changes occurred? In short, over the past twenty years or so corporate America has come face- to- face with new economic, demographic, and regulatory challenges. Business has become much more competitive. Severe cost pressures have forced companies to operate more efficiently by cutting costs and reducing overhead. At the same time the average American is living longer and using more resources in his or her retirement years. When traditional retirement plans that put the risk and responsibility on a company began, the average person spent somewhere between two and five years drawing retirement benefits before passing away. Today the time spent in retirement can be more than thirty years. Do you think companies want to keep paying you money for more than thirty years after you worked for them for maybe twenty years? Of course not. Some of you may think I'm being a little overoptimistic when I talk about retirement lasting more than thirty years. Our perceptions and expectations play a big part in financial planning and the sad fact is we're usually wrong! Here's a fact: According to the U.S. Census Bureau, centenarians, people one hundred years old or older, are the fastest- growing segment of our population. The second fastest is the age group eighty-five or older. Currently, there are about 40,000 people at least one hundred years old in the United States. That's more than one centenarian for every 10,000 Americans. Of those, 85 percent are women. More important, it's estimated that 40 percent of women who reach the age of fifty this year will live to be one hundred years old. (If you wantto get an idea of your own life expectancy, go to www .livingto100 .com .) Now, remember the results of these kinds of exercises are based on averages and are not an exact science. So if the Web site tells you that based on your lifestyle you will live only live to sixty- five, don't bet on it! You still need to save as if you had a longer life expectancy.