Financial Advisers Can Help Boost ‘Longevity Preparedness’

Nearly four out of 10 people, worldwide, face financial insecurity as they age, according to the World Economic Forum, and a recent study suggested the U.S. population is not prepared to meet the demands of living longer. John Hancock Life Insurance Co. and the Massachusetts Institute of Technology AgeLab announced on Wednesday a new metric: the Longevity Preparedness Index. Surveyed U.S. adults scored an average of 60 out of 100, falling short of passing marks in all eight critical areas of readiness for older age.

The LPI measured whether respondents had established healthy habits and long-term planning in the areas of care, community, daily activities, finance, health, home, life transitions and social connection.

On average, respondents scored 64 out of 100 for financial preparedness, only scoring higher in community (70) and social connection (69). Other average scores included 61 for life transitions, 60 for daily activities and 56 for both health and home. Care—planning for potential caregiving needs and preparing directives like power of attorney and a living will— had the lowest average score of any category:

Benefits of Financial Guidance

The survey found that good financial habits improved respondents’ overall longevity preparedness. Respondents currently working with a financial adviser scored 65, compared with 58 for those who were not. Even those who had previously worked with a financial professional scored slightly higher (60).

Among respondents who used financial advisers, those who discussed preparing for life at an advanced age had a higher overall score (67) than those who did not (63). In all areas of the index, respondents who worked with financial advisers showed higher preparedness, with the largest advantages appearing in finance (73 for those with advisers vs. 60 for those without), social connection (77 vs. 67) and care (49 vs. 39).

Owning life insurance was also linked with overall preparedness. Respondents with life insurance scored 63, compared with 58 for the uninsured. Respondents who reported having long-term care insurance, which pays for daily assistance in various living settings, scored 64, compared with 59 for those without coverage.

The LPI also found that surveyed men showed higher financial preparedness than women (65 vs. 63), but women outscored men in social connection (71 vs. 68), daily activities (61 vs. 59), preparing for life transitions (62 vs. 60) and care (43 vs. 41). When tallied up, men and women’s preparedness scores evened out at 60.

There were also racial and ethnic disparities in preparedness, with white respondents scoring highest with 61 and Hispanic respondents scoring lowest with 57. Marriage or partnership also brought an advantage (61 vs. 58 for single respondents), as did parenthood (61 vs. 57 for childless respondents). Longevity preparedness scores also increased with age, higher levels of education, higher household income and higher investable assets.

According to a press release, following the LPI findings, Manulife John Hancock will soon make health, prevention and early detection resources available to more plan participants; they had previously been offered through John Hancock’s “Vitality” rewards program.

“While health and wealth security are key, between those two vital bookends are the routines and assumptions that make up daily life,” said Joe Coughlin, the MIT AgeLab’s founder and director, in a statement. “The LPI seeks to spark public awareness and action to prepare people for living what is likely to be a full one-third of their adult lives.”

To provide the data, NORC (formerly the National Opinion Research Center) at the University of Chicago conducted online and phone surveys with 1,307 U.S. adults between May 14 and June 5. The LPI will be updated annually over the next four years as part of a five-year research collaboration between John Hancock and MIT AgeLab.