|
Research from Stanford Medicine reveals that aging happens in sudden shifts — not gradual decline. Here is a roadmap for deciding when your money should be used when factoring in good health.
When Your Body Peaks vs When Your Money Peaks
I’ve sat across from a lot of people who spent their financial lives doing everything right. They contributed significantly to their 401(k). They stayed the course through volatile markets. They deferred and saved and planned.
Then, they retired at 65 and watched their nest egg continue to grow; the habit of not spending had calcified into the default mode of their lives. What most current and prospective retirees don’t know, and what many financial plans don’t factor in, is that there’s a risk in financial planning that doesn’t show up in projections or Monte Carlo simulations: Capability Risk, or the risk that your wealth arrives after your ability to fully use it. Money compounds, but your ability to enjoy it doesn’t.
Aging Is Non-Linear
In August 2024, researchers at Stanford Medicine published a study in Nature Aging that tracked more than 135,000 different molecules and microbes across 108 people from age 25 to 75.¹ The finding? That humans don’t age at a steady rate. Instead, we undergo two distinct periods of rapid, dramatic biological change: one centered at approximately age 44, and another around age 60. Around age 44: significant shifts in molecules related to cardiovascular disease, alcohol and caffeine metabolism, and muscle and skin function. This happened in both men and women. Around age 60: a second wave affecting immune regulation, kidney function, carbohydrate metabolism, and cardiovascular disease risk. This is also when the risk of Alzheimer’s disease and heart failure begins to rise sharply rather than gradually. The takeaway is that aging isn’t liner, it happens in bursts. Our financial plans, on the other hand, are built as if aging were a gentle slope.
Why This Changes the Retirement Conversation
The traditional retirement planning framework looks something like this: save heavily in your 20s, 30s, and 40s, retire somewhere in your 60s, and spend down your nest egg for the following 20 or 30 years. The problem is that this model treats your retirement years as if they’re biologically uniform when they aren’t. A dollar spent on a trip to the Alps at 63 is not the same as a dollar spent on the same trip at 73, in terms of financial value or in terms of the experience itself. Your biology is the limiting component, and unlike your portfolio, it depreciates instead of compounding.
How to Adjust Your Frame of Mind on Retirement
The gap between how long you live, and how long you live well is significant. Lifespan is rising globe-wide, but health-adjusted life expectancies are not keeping pace. Longevity ≠ Healthy Living In the United States, the average person spends 12.4 years of their life in poor health — managing chronic illness, pain, or disability.² That means that if you retire at 65 and live to 85, the years between 65 and 73 are your prime window for deploying resources toward the retirement you actually envisioned. By 73, meaningful decline in health capacity has begun for most people. What does that mean? Don’t kick the can on your bucket list. Intentionally spending your hard-earned assets (with care) at the start of retirement is insurance against becoming the wealthiest person in the graveyard.
Mapping Your Financial Plan to Biology
Stage 1: Ages 25–44│Build aggressively. Live intentionally. For those fortunate enough to have their health, your body is arguably your most valuable asset in this stage of life. However, it’s an asset with a depreciating value. The financial priority here is clear: build, accumulate, and create a strong foundation. Maximize retirement contributions, eliminate high-interest debt, and put your future on solid footing. But this is also where capability risk begins to be a factor. Some experiences have a shelf life, and the cost of waiting is significant. Three days at Coachella, a backpacking trip in the Sierra, or training for a triathlon are activities that require a body in its prime. These are time sensitive. Phase 2: Ages 44–60│Protect your health. Front-load the active years You’ve crossed the age 44 cliff, so the hangovers are brutal, but you’re still a capable human. No need to fret about age, but it IS time to focus on what is most important to you. The right financial moves here: • Increase investment in preventive health • Shift from accumulation to preservation in the 5-7 years before retirement • Evaluate career optionality • Seriously think about what you want retirement to look like The right physical moves here: • Build good exercise habits • Curb excessive alcohol and caffeine intake. • Be more intentional with recovery, sleep, and nutrition Good physical habit formation in this stage of life can have a meaningful impact on when (and how sharply) you experience the next biological shift. Also, as previously mentioned, don’t keep deferring the bucket-list items that require physical capacity. Your body is still your ally, but the margin is narrowing. Take those physically demanding vacations with family or friends while you’re still working. Use those vacation days! The benefits are two-fold: you still have your health, and you don’t have to worry about supplementing income with your nest egg. Phase 3: Ages 60–70│The golden window. Spend intentionally. This is the most underappreciated phase in retirement planning, and the one most likely to be wasted. You’ve just crossed the second biological cliff, so your health is beginning to slowly deteriorate. However, you still very likely have energy, mobility, and cognitive sharpness. Your financial capacity and physical capability are both still reasonably high. This is the window where capability risk matters most. This is the retirement sweet spot. And yet, this is where many retirees hesitate. They spend decades learning how to accumulate, and then struggle to reverse this instinct. They live off income, preserve the principal, and wait for a future that doesn’t offer the same return on experience. The Stanford Medicine research gives us a framework (and permission) to front-load experiences and deploy capital in the early retirement years. Not to a reckless extent of course, but deliberately. Phase 4: Ages 70+│Shift from experiences to comfort, care, and legacy. At this stage, the constraints become more visible. Over time, the range of what your time, energy, and mobility allow you to do begins to narrow. This doesn’t mean you’re not allowed to travel or spend money during this stage. It means the type of spending that creates value evolves. Experiences that once required physical capacity may become less practical. In their place, comfort, convenience, and care take on greater importance. For many, this is also where spending becomes more outward-facing. Helping children, supporting family, giving intentionally, etc... Effectively planning for this stage (including having health care options funded before you need them) is one of the most generous things you can do for yourself and your loved ones.
Conclusion
We spend so much energy in this profession optimizing portfolios for the financial risks of retirement. Sequence-of-return risk, inflation risk, longevity risk, portfolio risk. But capability risk deserves a seat at the head of the table. A better question to ask: What experiences require a version of you that won’t exist in ten years? Those don’t belong on a 'someday' list, they belong in the early part of your life plan. The Stanford research is a reminder that our bodies don’t give us unlimited time to figure out what we actually want to spend our money on. The biological cliffs are real. The capability window is finite. Don’t worry about maximizing the account balance on your last day. Instead, map out a financial plan that aligns your money with the ability to experience it. More Reading: The Trip Is Non-Negotiable, But the Experience Depends on Your Financial Reality Six Months, 28 Posts, and a Newborn Many People Don't Need to Hire a Financial Planner. Here's How to Know If You're the Exception. References ¹ Lehallier, B., et al. (2024). Nonlinear dynamics of multi-omics profiles during human aging. Nature Aging. Reported by Stanford Medicine. ² Office of Disease Prevention and Health Promotion. (2023). Health-Adjusted Life Expectancy (HALE) Data. U.S. Department of Health and Human Services.
0 Comments
Your comment will be posted after it is approved.
Leave a Reply. |
RSS Feed