Living Well At 95

by: Roger Nusbaum

The New York Times had a lengthy article about a little island in Greece with a peculiarly high percentage of people in their 90s. Based on the article, they are not just making it to their 90s -- they are living active and social lives in their 90s. The article discussed some of the research being done on what these people do, don't do and what they eat.

This has been an occasional topic here. It is no secret that life expectancy has been increasing for many years due to medical advancement and changes in lifestyle. I am an optimist with these things, and believe that medical advancement will occur at an accelerating rate. As far as lifestyle changes, I believe society is generally much more aware of the benefits of exercise and how to improve dietary habits (also, fewer of us have dangerous jobs like working in coal mines). While that is true, it is also true that many people seem to ignore exercise and diet concerns, as obesity and diabetes are on the rise in the US.

The lifestyle question here is pretty easy to figure out in terms of certain habits that we know we should do, but are difficult to actually execute. The easiest thing in the world to do is to not go to the gym. The concept of all dietary things in moderation is also difficult to stick to, let alone a more health-conscious diet. While we're at it, don't drink soda. Another layer to this is staying active and involved with something -- having a purpose to keep you mentally sharp. The area where I live has provided many examples of this for the blog to reinforce the concept. I've also mentioned my father quite a few times -- he's 86 and always has three or four things going at any given time.

The financial implication is not as easy to figure out. Someone who is 60 and whose parents are alive (this describes my oldest brother) needs to plan financially for being around for a long time. The primary context for this blog is how to think about asset allocation. If inflation averages 3% per year, then expenses will go up 50% every 15 years (this is offered as a building block of understanding, not a prediction). We all know that some things have been going up much more than 3% and to yesterday's post, there will also be painful one-off expenses along the way.

As a philosophical matter, this means not being too early in making meaningful changes to asset allocation. A 60-year-old with a high probability of seeing 90 should probably not go from 40% fixed income up to 50% or 60% fixed income. Note that this is about target weightings, not tactical decisions made along the way. The market stays above its 200 DMA the vast majority of the time, even in the last 12 years of not making progress. If that continues to be the case in the future, then staying with equities will give a much better chance of keeping up with whatever inflation we have.

This is an obvious statement, but still worth pointing out for a long-term perspective. I know from interactions with all kind of investors in many places that it is human nature to be more short-term oriented, which leads to getting more bullish after the market has gone up a lot, and getting scared after the market has gone down a lot when the best thing is to map out a strategy that has some reasonable basis for working and then sticking to it.

One last contextual point about living past 90. The article was about people that age who are actively engaged in their routines and their social circles. Often with these types of articles, people leave comments about not wanting to be that old, as they envision not being able to do anything anymore, but that is not what the Times piece was about.