How Old Aren’t You?

By Thomas R. Kestler

Age. It’s just a number, right? Turns out, there’s a lot more to it. Our chronological age clock started ticking the day we were born. And, with each circumnavigation of the sun, our chronological age adds one year. Pretty simple.

But, over the last decade or so, the medical community has begun paying attention to our biological age. Biological age is defined as an estimate of the individual’s position with respect to his or her potential life span. Biological age can be affected by things out of our control, like genetics and things within our control, like lifestyle, stress, diet and exercise.

Allow me to geek out for a moment. Research has suggested that a set of nucleotides connected to the ends of our chromosomes called telomeres tend to shrink with age. Think of telomeres as a coat of armor for cells. Essentially, they dictate how quickly cells age and die. As we age, the telomeres shrink and become less effective, and we show signs of aging. Interestingly, those with a healthy lifestyle can increase the size of the telomeres, essentially making us younger biologically.

The chart below helps to illustrate this concept. Your chronological age is measured horizontally and biological age vertically. The red diagonal line represents instances where biological age equals chronological age. The scattered dots are a random sampling of the population.

In the younger ages (lower left), there is very little dispersion between chronological and biological age (we haven’t picked up a lot of bad habits yet). As time goes on (moving right), we see a greater dispersion in the dots. The person in the red circle represents a chronological 55-year-old who, for whatever reason, has a biological age of 70. In other words, would be expected to have a 15-year shorter lifespan.

The person in the green circle has a chronological age of 65 and due to good genes, healthy lifestyle, or both, has a biological age of 50. He would be expected to live 15 years longer than average.

In addition, a study done by the American Medical Association found that higher income households tend to have biological ages lower than their chronological age. In the chart below, household income increases to the right while biological age increases vertically. All other things being equal, a 50-year-old in the top decile of wage earners could have a biological age of 40.

So, what does this mean for me? Planning for retirement income can be difficult at best. We tend to focus on asset allocation and sequence of returns risk – but do we consider biological age? Do we adjust for a positive or negative biological age score? And, if so, what should that adjustment be?

One way to think about it is to consider insuring for the greatest risk.

As you can see above, the greatest risk lies with clients who enjoy an above average lifespan (lowered biological age) and below average returns. I would suggest that most people in our area check both boxes. They would tend to be healthier than average and investment returns over the next decade are expected to be significantly lower than the last decade.

Just like any other great risk, insuring for the possibility makes sense. What vehicles guarantee an income that can’t be outlived? Pensions, Social Security, and annuities. Because clients in the red box have a longer than average life expectancy, an annuity that provides lifetime income becomes a much better deal mathematically than for someone on the left side of the chart.

So, as you are planning for your retirement, if you happen to be in the red box,

discuss biological age with your advisor. And seriously consider, what percentage

of your retirement cash flow would you like to be guaranteed?

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Tom Kestler has been involved in the financial planning field for over 45 years. He is a graduate of Millersville State University and the College for Financial Planning in Denver, Colorado (for which he has acted as an adjunct instructor) and carries the Certified Financial Planner (CFP) designation.

He has also been awarded the Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC) and Chartered Mutual Fund Counselor (CMFC) designations from the American College in Bryn Mawr, PA. He was the founder of Kestler Financial Group, Inc., a firm which specialized in the marketing of financial products and services to over 5,000 independent representatives throughout the United States. Kestler Financial Group was acquired by Highland Capital in 2018.

Mr. Kestler carries Life, Health and Variable Products licenses in several states and provides consulting services to insurance companies on product design and development. He also acts as an expert witness in securities and insurance litigation cases.

Prior to his retirement, Tom served as VP Advanced Sales at Highland Capital, and also CEO of Branch Development Partners, an Office of Supervisory Jurisdiction (OSJ) for Securities America, Inc. (now Osaic), an independent securities broker/dealer.

Tom will be teaching an upcoming Financial Wellness Course— the first class will be held on Monday, December 8th. Sign up today!

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In the meantime, if you have a question for Tom, please post it in the Comments box below and he'll answer it for you.