Good Genes Are Priceless, but They Can Make You Millions, Too

Antisa Khvichava
Antisa Khvichava

Antisa Khvichava must have been a fascinating dinner companion, as she was a witness to so much history. The woman from the Eastern European Republic of Georgia, who died earlier this month, was reportedly born in 1880 -- well before Finland declared independence from Russia and not much more than 100 years after America broke away from England.

So what can Khvichava teach us about our own personal finances? Plenty, actually. By the example of her long life we can learn a lot about achieving our own independence. That's because life span has some critical implications -- financially and otherwise -- for the overall quality of life we lead both today and in the far-off future.

Antisa Khvichava oldest living person
Antisa Khvichava oldest living person

Great Expectations

Khvichava's birth certificate was long lost, but she claimed to be 132 years old. You're right to think that you'll probably never reach that advanced an age, but you might come a lot closer than you think.

Right now, the average American man can expect to live 76 years, and the average woman 81 years. According to Social Security Administration tables from 2007, if you've made it to 50 years of age, you can expect to live 29 more years (to age 79) if you're male and nearly 33 more years (to 83) if you're female. It's estimated that girls who are 10 years old today stand a 30% chance of hitting 100 eventually, and even 60-year-old men have a sporting chance of nearly 10%.

The takeaway here is: It can happen to you!

It's a useful thing to know, because that potentially extra-long life has financial ramifications for you, either good or bad.

Being Cursed with a Long Life

Let's tackle the bad first. Living to 100 -- or, more unlikely but still possible, 110 -- can wreak havoc on your life if you're not prepared.

Consider that according to the 2012 Retirement Confidence Survey, 30% of Americans have saved less than $1,000 for retirement. Fully 80% have saved less than $100,000. Among those who are actually close to or in retirement -- those aged 55 or older -- 60% have socked away less than $100,000.

Now $100,000 might sound like a lot, but remember that many of these folks have saved less -- say, $50,000 or $10,000. And even $100,000 isn't going to last that long. If you retire at age 65 and live to 100, that's 35 more years of living to cover by stretching however many dollars you've managed to save.

Sadly, it's easier than you think to end up pinching pennies, mooching off your children, or living in poverty. All you have to do is... nothing.

In this way, Antisa Khvichava is a warning to us all -- and a beacon of hope.

Being Blessed with a Long Life

If nothing else, let Antisa's longevity inspire you to be more proactive about your retirement saving and investing. Starting now -- no matter what age you are -- means the difference between struggling financially for decades and dying broke or setting yourself up for a comfortable retirement (and maybe even leaving some riches to your heirs).

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Let's take the admittedly extreme example of Khvichava and her 132 years. Imagine that you save aggressively and invest effectively over your working life, ideally beginning while you're still young. You stand a good chance of being able to build a nest egg of $1 million.

Let's say that it's mostly in stock when you retire at age 65, and you plan to live off of its dividend income (along with Social Security and any other income stream available to you). A mere 2% dividend yield will generate $20,000 in the first year, and a 4% yield will generate $40,000. (One of the nice things about dividends from solid, growing companies is that they tend to rise over time, so you can probably keep up with inflation.)

If you end up living to age 132, you'll have 67 years of retirement -- that's more than the years you lived before you reached retirement age. And if you leave that million-dollar stock portfolio to grow over that time, at a 10% per year annualized growth rate, it will eventually become $539 million!

OK, let's be a little more realistic. Just for the sake of illustrating how a nest egg can continue to grow well into your golden years, here's what $1 million will become, growing at three different average rates of growth, over a handful of time periods:

$1 million

Growing at 3%

Growing at 7%

Growing at 10%

Over 10 years

$1.3 million

$2.0 million

$2.6 million

Over 20 years

$1.8 million

$3.9 million

$6.7 million

Over 30 years

$2.4 million

$7.6 million

$17.5 million

Over 40 years

$3.3 million

$15.0 million

$45.3 million

Over 50 years

$4.4 million

$29.5 million

$117.4 million

Keep in mind that the stock market has grown by an average of 9% to 10% or so annually over many decades and your portfolio might do a little better or worse than that over its time frame. But even if you include a mix of bonds in your portfolio, and even if you "only" live to 80 or 90, that's 20 to 30 years that your savings has to grow.

See? You don't need Khvichava's life span to make that million multiply.

Up Your Odds

Giving your money time to grow -- even if it's not a million dollars right now -- is the key to maximizing the wealth side of the health-wealth equation. And while your life span isn't entirely under your control, of course, with a little more care to what you can control (diet, exercise, family and community ties), you can position yourself for a long, comfortable life.