Financial Preparation for a Healthy Aging Process

Financial Preparation for a Healthy Aging Process

Planning for the Future: How Financial Planning Can Save Lives

Planning for your long-term financial future doesn’t just make good economic sense — it could also save your life. According to a report published in PLOS One, people in both the United States and the United Kingdom have a higher risk of dying prematurely if they aren’t engaged in long-term financial planning. In fact, the study found that the shorter a person’s financial planning horizon, the greater their risk of dying.

Lead researcher Joe Gladstone, an assistant professor of marketing at the University of Colorado Boulder, emphasized the importance of looking years into the future for longevity. He expressed concern about the significant number of people who are living week to week, month to month, and paycheck to paycheck, without considering their long-term financial well-being.

The study further revealed that long-term financial planning is most important to the health of those with the fewest means. The researchers found that increases in financial planning were significantly associated with better health among households making less than $80,000 a year and with overall wealth lower than $450,000. The paper states that planning ahead represents an important resource for those with few financial resources, as they lack the buffer to cope with financial shocks.

The geographical scope of the study was extensive, with data collected from both the United States and the United Kingdom. The U.S. data tracked nearly 11,500 people over a 22-year period, while the UK data covered about 11,300 people for a decade. The results showed that short-term financial planners had about a 20% higher relative risk of early death compared to long-term planners in the United States. In the United Kingdom, the difference was even more significant, with short-term planning associated with an almost 50% higher relative risk of early death compared to long-term planning.

The stress caused by financial uncertainty is considered the main factor behind this increased risk of premature death. Financial insecurity can take a toll on mental and physical well-being. The National Council on Aging’s director of economic and financial security, Genevieve Waterman, highlights the relationship between health and financial planning, stating, “Your health is your wealth and your wealth is your health.”

David John, a senior policy advisor with the AARP’s Public Policy Institute, adds that stress can harm health and even lead to death. Having a longer-term financial plan is one way to reduce financial stress. John mentions that having enough money for retirement or to pay bills is a significant stressor in people’s lives. He believes that incorporating long-term financial planning into one’s life can significantly reduce the risk of premature death.

The researchers of the study also suggest that people with a long-term plan are more likely to be able to afford preventive care, which can help prevent chronic health problems.

However, it is essential to note that this study is observational and cannot definitively prove a cause-and-effect relationship between health and financial planning. Other factors, such as a healthier lifestyle, might influence the observed association.

Unfortunately, those who would benefit the most from financial planning, such as low- and middle-income individuals, are often the least likely to be able to access it. Genevieve Waterman advocates for universal access to financial planning and financial literacy education to provide everyone with the necessary tools for a secure financial future.

If you are looking to reduce financial stress, David John recommends starting by jotting down your purchases and expenditures for a couple of months. This exercise will give you a clearer understanding of your spending habits and whether they align with your financial goals. It’s also important to include healthcare costs in your financial planning, as out-of-pocket expenses can significantly impact your budget.

In conclusion, financial planning goes beyond economic stability; it has implications for our physical and mental well-being. By taking a long-term approach to our finances, we reduce stress, decrease the risk of premature death, and enable ourselves to afford necessary healthcare. It’s time we recognize the importance of financial planning and ensure that it is accessible to all. After all, as the saying goes, “Your health is your wealth.”

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More information: The National Council on Aging has more about financial planning for seniors. Sources: Genevieve Waterman, DSW, director, economic and financial security, National Council on Aging, Arlington, Va.; David John, MBA, senior policy advisor, AARP Public Policy Institute; PLOS One, Sept. 27, 2023, online