When we ask our clients to describe their ideal retirement, two of the most common responses are “healthy” and “secure.” In our experience, most successful retirees find ways to align these two goals … and throw in a little fun as well. In fact, it seems that there’s a definite psychological connection between how we plan for our money and how we plan for our health. The Association for Psychological Science published a study that found that whether a person contributes to a 401(k) plan is a strong predictor of that person taking positive steps to improve their health (1).
Here’s why developing good habits can lead to big dividends down the road for both your health and your nest egg.
The Harvard School of Public Health studied how five habits affected long-term health:
- Eating well
- Exercising regularly
- Maintaining a healthy body weight
- Avoiding smoking
- Drinking alcohol in moderation.
According to the study, women who adopted four of these habits by age 50 lived 34 more years free of diabetes, cardiovascular disease, and cancer than women who did not. Men who adopted four of the five habits lived 31 more years without developing these diseases. And both men and women who adopted this lifestyle lived almost 24 years longer than those who didn’t (2).
If you’re struggling with a bad habit, or if you’re trying to develop a new healthy habit, we can point you to some material on more effective goal setting. Building daily wins towards weekly and monthly targets could make a big difference to your health in the next 12 months and beyond.
Of all the tools that make up your financial plan, nothing has a bigger and more immediate impact than your spending. How many of these healthy spending habits can you check off?
- Spend less than you earn.
- Set a monthly budget and stick to it.
- “Pay yourself first” by making automatic monthly contributions to savings and retirement accounts.
- Pay down credit card debt every month.
- Maintain an emergency savings account.
So, how did you score? Are there adjustments that you can make to some items on this list (cancelling that club membership you never use) that will help you reach your goals in other places (maxing out your IRA contribution for the year)?
The relationship between your money and your health is something we will be monitoring closely once you do retire. Without a monthly paycheck and employer-subsidized health care coverage to fall back on, your nest egg will have to pay for whatever Medicare doesn’t. If you or your spouse have any significant health issues or prescription drug needs, choosing the right Medicare options will be especially critical to keeping your out-of-pocket expenses under control. We have our own Medicare expert on call for all of our retainer clients - if you need help getting set up, let us know!
One way to keep expenses low is to improve your lifestyle now. A study by the American Journal of Preventative Medicine linked the healthy habits we discussed above to significant health care cost savings for seniors (3). By controlling things you can control early in your retirement (Seriously, stop smoking!) the money you save on health care could provide a cushion later in retirement if something unexpected happens, or if you or your spouse need in-home nursing or an assisted living facility.
A healthier lifestyle will also give you more options for enjoying the assets you’ve worked so hard to save and grow. Do you want decades of bad eating habits to keep you and your spouse from taking that dream trip to Europe once you retire? If a lifelong lack of exercise creates a serious health problem at 65, the money you earmarked for a move to Florida might have to cover gaps in your Medicare coverage.
Our goal for clients is that they live the best life possible with the money they have at every stage of their lives. Let’s talk about how our Life-Centered Planning process can help you develop habits that will reinforce each other and improve both your life and your finances.