We are always told that life is full of risks, but the thought of my Navy F-14 Tomcat being shot down really hit home to me while flying low altitude photo reconnaissance missions over a war zone in Bosnia-Herzegovina.
The risks were ever-present — starting in flight school, preparing for deployment, and then actually flying into harm’s way.
While I had to rely on the preparations of others and machinery for the safety mechanisms in the Tomcat, I knew it was up to me to mitigate some of the financial loss my family might endure if my missions didn’t go as planned.
Managing Risks
Some risks have such minimal impact on our lives that we just accept them, while others are so catastrophic that we would be foolish not to transfer part or most of the risk.
The way I see it, when it comes to managing risks, we have four choices: We can try to avoid them, reduce them, accept them, or transfer them.
Here are some of the ways I’ve approached managing risks.
The Risk of Dying Young
For the risk of dying early, I was able to transfer much of the risk to the U.S. government via my Service Members Group Life Insurance (SGLI), and later, to other personal life insurance coverage.
Although, the probability of dying young may still be low, even in a war zone, the financial impact can be life changing for many families.
Although the Naval Academy and my flying days are in the rear-view mirror now, I still need life insurance while I’m working to protect my loved ones if I were to die before retirement.
That’s why I keep adequate life insurance in place even though I’m in much better financial shape today.
At USAA, we believe that means having at least enough life insurance to cover your debt and financial needs and replace five years of income.
The Risk of Living Long
Although I retired from the Navy in 2015 , my second retirement is starting to come into focus for me.
By nature, we tend to focus on dying too early, while overlooking the risk of living “too long.” Here are some sobering statistics that might change how we think about living longer.
- A man who is 65 years old today can expect to live, on average, until around age 84.
- A woman who is 65 years old today can expect to live, on average, until nearly age 87.
- For a couple, both age 65, there is at least a 30% chance one of them will make it to age 90, and just under a 10% chance one of them will live to age 100.
However, what if you’re not in just “average” health?
Consider a married couple both age 65, non-smokers and in excellent health.
According to the Society of Actuaries, he has a 42% chance of living to 90, and 7% chance of making it to 100, and she has a 53% chance of living to 90, and a 13% chance of making it to 100.c
Most of us aspire to live long lives but living longer means that we must come up with the resources to pay for those extra years of living.
To manage the risk of outliving your money, here at USAA we believe that you should have enough guaranteed income from secure sources such as Social Security or a pension, to at least cover your essential expenses.
If there is a gap, then we advise folks to consider adding a personal pension through an income annuity to ensure that you won’t outlive your resources.
Back in my flying days my views on longevity were driven by my most immediate and short-term need — getting back to the ship.
These days, however, I see things quite differently and I’m well-prepared for the much longer trip ahead of me in retirement.
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An F-14 Tomcat lands on a U.S. Navy aircraft carrier in 1988. (Photo: Master Chief Photographer’s Mate Roger Dittmar/U.S. Navy)