It’s the unanswerable question every investor eyeing retirement, and his financial advisor, seek an answer to—How many years do I have to live? The term of retirement is obviously a key factor in calculating how much money must be put away to ensure a nest egg can last. Now new genetic research from the Boston University Schools of Public Health and Medicine and the Boston Medical Center may narrow the variety of possible answers to that question significantly. Researchers say they’ve identified a group of genetic markers that can predict “exceptional longevity”—those who will live into their late 90s and older—with 77 percent accuracy.
The findings, based on a study of more than 1,000 centenarians and several control groups, were published in this week’s issue of the journal Science. The Wall Street Journal today also reports that the Boston researchers are working on a test that could indicate whether someone falls into that long-living group. In a statement on the research, Boston University cautioned that the predictive quality of the research was not perfect, and that environmental qualities such as lifestyle also contribute to one’s longevity. Before a test could be marketed, the college added, an understanding of the implications of the models’ use in a general population would be needed.
Some financial advisors say the information could be helpful in the often-nebulous effort to determine the length of a client’s retirement. “People are usually pretty confused about how long they have,” says William Baldwin, president of Pillar Financial Advisors in Waltham, Mass. and chairman of the National Association of Personal Financial Advisors. When Baldwin sits down with clients, he asks standard questions about their health, whether their parents are alive and, if so, how their health is doing. Actuarial tables can then be consulted, and Baldwin likes to run a Monte Carlo simulation to determine probability ranges for whether a client’s money will last until the estimated time of their death.
Planners probably never get the estimate right, says Robert Glovsky, president of Mintz Levin Financial Advisors in Boston and chair of the Certified Financial Planner Board of Standards. “You’re sitting here trying to project out somebody’s life expectancy, somebody’s asset base. There’s a lot of assumptions, mortality being just one of them. It’s modeling. You can’t look at it and say, ‘I know definitively what is going to happen.’”
The test that researchers are developing would be useful, Glovsky says, because it would help investors think about how long they need to plan for, perhaps stretching out the assets for a longer period of time. Conversations over long-term care insurance and annuities might play a bigger role in planning, he says. And test results that showed someone would not have the genetic markers for longevity would be useful as well, he adds. “It’s a conversation you have with your client. Are you comfortable planning for less, now that you know?”
The prospect of knowing how long you have could have other implications as well. Glovsky wonders if insurance companies would price products higher or reduce benefits if they understand their clients’ longevity prospects better. Over the last decade, the life expectancies have risen, and most financial planners have adjusted financial plans accordingly, says Anthea Penrose, spokeswoman for Raymond James Financial.
Baldwin suggests that some investors may prefer not knowing how long they have. “Most of our clients don’t really like this stuff,” he says. “They just want to feel comfortable and they want us to say to them, ‘You’re OK at this level,’ or ‘You’re not.’ And that’s why it’s our responsibility. We can’t assume they know they’re making a mistake when they’re overspending their money.”