New Report on Longevity Risk

People are living longer and planning for longer retirements, which is why The Stanford Center on Longevity and Wells Fargo Wealth & Investment Management published a new report on longevity risk. Joseph W. Montgomery, CFP®, AIF® of The Optimal Service Group of Wells Fargo Advisors shares some of the key takeaways.

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  • 10 mins 32 secs

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People are living longer. A hundred years ago, the average life expectancy was 53 years. Today, it's jumped to almost 79.  This dramatic increase is great for humanity. But it brings new challenges, such as planning for a longer retirement. Joining us now to discuss a new report on longevity risk is Joe Montgomery. He's Managing Director Investments at the Optimal Service Group of Wells Fargo Advisors. Joe, what are some of the key takeaways? 

Hi, Jenna. There's a lot to unpack here in this kind of study. Most interesting is probably just the realization

that people have a 50% increase over a hundred years. So if you then take the past and relate it to the future, you think about where we're going to be. And it's not me or you but even just the children born today, how much longer they're going to live. But it is pushing everyone to think more about planning and am I going to be OK? With the holidays right around the corner, you say you've been thinking a lot about A Christmas Carol. 

On that note, what can we learn from Scrooge here? 

Well, Ebenezer Scrooge had past, present, and future. And it's interesting that the past and the present are really, when he went through them, really what stimulated his interest in the future. And as you recall, he asked, does the future have to turn out this way? And so I think for a lot of people, they're using it-- at least the way I think of it, they're starting to look at the future where I think they were so tied up in a pleasant present-- let's call it-- that the pandemic has really stimulated them to think about longevity, the future.

Am I going to be OK? And recent surveys say that people believe the pandemic has permanently impacted their ability to retire. Should this be the case?

And how are you helping clients navigate this time?

Well, it's all individual, of course. And it depends on their situation. But I think the very fact that people are paying attention to it and have that concern means they have an opportunity to fix it if they're not right. And so the earlier they address it-- I actually had a 26-year-old question me about this and about them planning. I don't remember many times in my life where I've had somebody come up and want to talk to me at 26 about how they might take care of their children. And they don't currently have any, and they're not married. So there's a mind change or a shift going on, I think, in the population. And they are much more focused

on this than they've ever been.

And with an extra 50% of life

over the last century as you

mentioned, how are

you talking to people

about the difference

between biological age

versus chronological age?

Can you explain that to us?


That's a great thought I think

about thinking biologically

because you see so much more now

books written about lifespan,

the hundred-year

life, all these things

that people are

starting to focus on.

And so really what they're

capable of doing at greater

chronological ages, it's

really quite amazing

when you think about it.

Look, Tom Brady,

who didn't have a--

he's 43 I think now.

And you look at Drew Brees.

He's 41.

They're playing high-level

professional football

at what would be for football

an advanced chronological age.

So they're really

good examples of what

determining what your biological

age is being really important.

And I think you're seeing

more and more of that.

And we're seeing more and

more of it tied back into,

how do I finance that?

And that means getting the risk

right and the allocation right,

which are interesting

because those are themes that

have been true 50 years ago.

And they're true today.


To that point, just as

people are living longer,

they're also sometimes

working longer and perhaps

getting a college degree

much later in life.

They're just doing

things differently now.

Yeah, absolutely right.

And I think there's some

school of thought that

says we'll go from the

three stages of life

being education, work, and

retirement to more of a four

stage, which will be maybe

two types of employment

or just continuing what

they're doing because they can.

Extreme examples like I just

mentioned in athletics where

people are actually

playing longer,

but it's also true in

business and other things.

Conversely, you're seeing

people making the decision

to retire from their current

life to do something else.

I've had several

instances of that

personally where

people that I know

have decided to quit

doing what they're doing.

But they're not

going to quit doing.

They're just going to quit doing

what they're currently doing.

And they're going to

do something else.

And a lot of people

want to know,

am I going to be OK,

especially in retirement?

And Monte Carlo

simulations can help.

How do they do that?


Well, it's just probabilities.

Probably an unfortunate

name, Monte Carlo,

because it connotes gambling.

But it's really just the

probabilities of success.

And that to me is--

it's becoming more

and more important.

20 years ago or more when a lot

of that started to come out,

I don't think

professionally there

was a lot of interest in

it because people just

didn't really see the need.

They weren't asking,

am I going to be OK?

Because they didn't have

the extended retirement.

I think now people

actually ask us

that, we've developed

systems so they

can play what-ifs on their

own with their accounts

to examine it.

It's a clear shift because it

measures risk and helps people

get a handle on, are

they going to be OK?

Can they retire early?

Should they retire early?

What happens if they work

in a different fashion?

We run into that a

lot with entertainers

because they have more limited

life spans at least from a work


So running those at various

ages where you wouldn't normally

think it was as

important, 35, 45,

I think people are

very interested in it

at much earlier ages.

For many people too,

longevity planning

is an opportunity to revisit

their planning, sort of

Back to the Future scenario.



You don't have to get in Doc

Brown's DeLorean on this one.

But it helps to, again,

think about looking out

and what can you change?

So whether it's Michael

J. Fox or whatever,

or whoever it is thinking

about Back to the Future, to me

it's really getting us to what

we should be doing anyway.

That's what you

want people to do

if you're sitting in my seat.

You want people to

look at and in essence

put out what-ifs about

what they might like to do.

That's the part

about the future.

And then we determine

whether it's realistic.

And that has proved to be very

effective through a number

of cycles now.

So I think our confidence in

it has gone up quite a bit.

And I think our clients have.

They ask for it.

And as the complexity

goes up, the request

for conversations about all

of this goes up as well.

So staying organized

and disciplined

is extremely important, not

only for advisors, but also

for their clients.

Would you say that

refining the client's plan

is more important now than ever?

I would definitely say

it's more important

now than ever because people

have learned that they need it.

And therefore, they want it.

And we've got to deliver it

to them on a timely basis.

Interestingly enough,

this whole pandemic

has created an interesting

opportunity because

of the use of the video

tools and sharing information

and getting it out there.

We're now able and have

been for some time--

we've done this

before the pandemic.

But we're doing it--

instead of once a week,

we're doing it twice a day.

So it's helped us leverage

up, the technology has.

And they very much want that

information distributed.

So we've got to

find ways to do it.

Finally, Joe, anything

you'd add about this report

that you published with the

Stanford Center on longevity?

Well, for me, I

think that report

was validation about what's

going on in our profession

and also what's going

on in the world.

And when you have people

like the folks at Stanford

backing it up and supporting

this kind of analysis,

it all leads to

the idea of helping

people address the issue

of, are they going to be OK?

And it's amazing, whether

it's 10 years or 20 years,

it's always sort of

been the same thing.

It's just more important

today than ever.

And this kind of information,

this kind of report,

really helps to move people

to the right solution.

Well, Joe, always

great to have you.

Thank you so much

for joining us.

Pleasure to be with you.

You all be safe and well.

You too.

And thank you for watching. And that was Joe Montgomery, Managing Director Investments at the Optimal Service Group

of Wells Fargo Advisors. And I'm Jenna Dagenhart with Asset TV.