When you think of octogenarians the first thing that might come to your mind is the term “the greatest generation.” And that would not be a mistake. The majority of people in their 80s were part of the generation that successfully fought for our freedom in World War II. They were typically born in the 1920s or early 1930s and if they didn’t actually fight in the war they probably helped make all those planes, tanks, cannons, ships and the other armaments that helped us win the war. When you think of them today you probably picture frail, little, old people rocking on their porches or sitting in retirement homes. And probably the last thing you would think of is that you could benefit from the financial lessons they learned over the course of their lives. Well, think again.
There are financial lessons that could be learned from these octogenarians and here are four of the most important.
Lesson number 1 – not saving more
One octogenarian who is part of the World War II generation admits that she made a number of mistakes with her finances. For one thing, she wishes that she had worked full-time for more years to get a better Social Security income and had saved more when she was in her 20s and 30s. One survey of 514 adults age 80 and up by the insurance company New York Life, found these octogenarians’ retirement incomes are primarily from Social Security (90%), savings (57%) and from pensions (55%). Of the 514 surveyed, 45% reported they don’t have a pension and 35% lacked a 401(k) or 403(b) account. And nearly 33% didn’t even have a savings account. Given the fact that it’s very unlikely that you’ll have a pension and who knows what will happen to Social Security the lesson to be learned here is to count on yourself and start saving for your retirement as soon as you can.
Lesson number 2 – Have a long-term outlook
An 82-year-old financial advisor based in California says his important lesson is that you need to have a long-term outlook when making financial choices. To put this another way, you need to stay the course and don’t let yourself be tempted to go off and do something different because of today’s news.
He noted that when people hit middle age they still must be very careful about saving steadily for the future. If you can save all the money allowed by the tax law, he noted, you will be able to accumulate a lot of money and the earlier you begin this the easier it will be.
He admits that this type of saving takes a certain amount of self-discipline that begins with defining your retirement goals and the lifestyle you will want. It’s possible that you’ll have to forego some of today’s expenses like that two-week vacation to Hawaii in order to have more choices later.
Research has also shown that as people grow older they generally don’t spend as much. This is because by the time you reach your late 70s or 80s you’ll probably travel less, go to fewer movies and concerts and eat less. Your body just kind of slows down.
Lesson number 3 – Your earliest retirement years will be your best
In the New Your Life study, almost 75% of the respondents said that their earliest years of retirement were their best years. This is generally because this is when people are the healthiest so it’s easy for them to travel and enjoy fun hobbies. In fact, almost 50% of the respondents said that their happiest and best year was within their first five years. And almost half of the respondents reported that they had already lived for more years than they had expected – which underscores the need to save and plan ahead.
Octogenarians that responded to the New York Life survey said that in timing their retirement they focused on their financial situation more than their age or health. This may seem somewhat basic but these octogenarians said they wished their finances had allowed them to retire sooner when they were still healthy and active. This would have given them more years to enjoy their retirements. For that matter, it turned out that money isn’t everything to these people. Their top priority was to live longer and be in good health. Sometimes what people really want is time and not money.
Regardless of this, financial planners say that today’s younger generation should find a financial planner that could help them make better financial choices. Several of the octogenarians said this is something they wish they had done when they were younger. As one of them noted, I didn’t really think to do this. That was not very practical of me, really. And it’s not only the younger people that need good financial advice as older people can also sometimes need advice.
How a financial planner could help
Whether you’re in your 20s and just beginning to plan for retirement or in your middle 50s a financial planner could help you and in some ways you might not have ever considered. The primary way they do this is, of course, by helping you identify goals and spending priorities. This can be helpful because many of us have a hard time identifying what’s important. If you sit down with a financial planner he or she will help you look at your future needs, determine your goals and spending priorities.
Second, a financial planner could educate you about the different financial options and products. In this case, he or she functions as a kind of teacher to help you better understand financial options and products.
One you might not ever thought of is that a financial planner can provide a dose of reality. There are times when we get too pessimistic thinking that we won’t ever be able to achieve our goals. But a financial planner would help you create realistic timelines and maybe even modify your expectations so you don’t end up too far off base.
Finally, a financial planner can help keep you on track. It’s not necessary that you have to keep working with a financial planner but it could be a good idea to check in with one from time to time. She or he will hold you accountable for your money decisions and remind you that you need to say no to certain spending decisions. They may even give you advice about your debt relief options in case you still have a lot of debt. Checking in with your financial planner occasionally can help keep you on track with your retirement plan and knowing the fact that you will eventually have to face your financial planner can be a real motivation to stick to your plan.