Living to 100: Financial planning for a longer lifespan

Medical journal The Lancet reported a story that's been widely covered by major news outlets: According to The Lancet, more than half of all babies born in the U.S. (and other industrialized countries) since 2000 will live to be 100 years old.

Once a milestone only a handful of seniors reached, this new triple-digit benchmark will become downright commonplace by the time this century winds to a close. Half of all babies born in this country in 2007 will live to be 104 years old.

While the novelty factor is high ("Grandpa, tell us again how there was only one channel of the Internet when you were growing up!"), this announcement has far more serious implications for today's Americans -- both young and old -- when it comes to managing their personal finances. The Lancet study's lead author called the news good for individuals but challenging for societies.

First, a bit of history: While improvements in lifespans over the first half of this century were largely due to decreased infant mortality, longer living today comes on the back end. While the nation braces for the aging of the Baby Boomers, a process that's only just begun and has huge implications on everything from Social Security to health care, the impact of the next wave will be even greater. Fortunately, the study indicates that not only are people living longer, they're staying active longer; in other words, 70 could be the new 40 by the time your kids are adults.

What does this brave new world mean for your personal finances -- and that of your children? Walletpop spoke with John Rother, executive vice president for policy and strategy at the AARP, and asked him to weigh in on the implications for tomorrow's seniors.