The Retirement Solution That Could Extend Your Life
December 03, 2020

The Retirement Solution That Could Extend Your Life

It’s hard to imagine that Warren Buffett, at 90 years of age, is still the chairman of Berkshire Hathaway. And the company’s co-chairman, Charlie Munger is seven years older. He turns 97 on January 1st.

I used to think these guys were nuts. They’re each billionaires, so I wondered why they didn’t just kick back and enjoy their money. Unfortunately, that might have them led to kick the bucket instead. I’ve seen these guys, at Berkshire’s annual general meetings eating See’s Candies and drinking Coca Cola. Based on biographies I’ve read, neither of them eat vegan diets that supposedly promote longevity. Neither of them are Thai Chi or meditation masters, either.

If you’re wondering how they’ve lived so long and kept so darn sharp, we could look to a different school of thought. It might even re-shape how we think about retirement.

Shigeaki Hinohara, a Japanese physician, was chairman emeritus of St. Luke’s International University and honorary president of St. Luke’s International Hospital. He wasn’t a fan of early retirement. He said it’s healthier for people to work long past sixty-five years of age. Hinohara died when he was 105 years old, and he was still working with patients just a few months before his death. In fact, his datebook included five more years of appointments.

Most people, in western culture, aspire to retire. But it’s not as coveted in Japan. A 2017 survey revealed that 43 percent of Japanese workers plan to continue working after they reach traditional retirement age.

And most don’t do it for the money. Plenty of Japanese just want to keep moving, socializing and thinking. After they retire from their professions, they often choose work that’s less demanding, but contributes to the welfare of their society. They find new employment at places like the Silver Human Resources Center in Matsudo. It’s one of more than 1,600 senior employment agencies in Japan.

Their tendency to work longer might lead to longer lives. On average, women in Nagano, Japan live to 87.67 years of age. The men live an average of 81.75 years.

The average American doesn’t live that long. According to the U.S. Department of Health and Services, American women live to an average of 81.1 years. American men live an average of 76.1 years.

Other factors might contribute to this difference. But working longer appears to boost longevity. People in Nagano, Japan, for example, have the highest employment rate for the elderly in Japan. And they live longer in that region than anywhere else in the country.

Older Americans who continue to work live longer too. In a study published in the Journal of Epidemiology and Community Health, they found that people who worked even just one year past traditional retirement age had a 9 percent to 11 percent lower risk of dying over the 18-year study, regardless of their initial health.

A study of 83,000 adults published in the CDC journal, Preventing Chronic Disease, found that people who continued working past the age of 65 were three times more likely to be in good health, compared to those who retired earlier. And older people who continue working have lower odds of suffering from dementia.

I’m not suggesting we should die at our desks. But like the Japanese, in our early senior years, taking a less stressful (preferably physically active) part-time job might do wonders for our health. It could also reduce the amount of savings we require to retire.

That might reduce financial stress. Consider a part-time job that pays $15,000 a year. That’s equal to an investment portfolio worth $375,000. For example, if a retiree withdrew an inflation-adjusted 4 percent per year from $375,000, that would equal $15,000. If a 60 year-old retiree bought an inflation-adjusted lifetime annuity, they would require about $340,000 to provide income of $15,000 a year.

Retirement costs are also smile-shaped. The first few years of retirement or semi-retirement tend to be the most expensive. If we want to travel, that’s often when we do it. Working a part-time job, in many ways, can take us back to when we were kids. We might work a little then take a long vacation before finding another casual job when we return.

There’s another benefit to this, besides living longer. The extra income might help us defer Social Security payments. By doing so, we could increase our monthly payments by more than 70 percent. That’s good for two reasons. The smile-shaped costs of retirement drop in our late 70s, but they tend to pick up again when we’re older, as a result of higher medical costs. By deferring Social Security, we can receive higher income later to better handle those costs.

This brings me back to Warren Buffett and Charlie Munger. They might, in fact, offer the best advice of all. Each has been known to say: “All I want to know is where I’m going to die so I’ll never go there.”

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