The Wealth & Health Feedback Loop: How to Live 14 Years Longer (and Actually Afford It)

by | BiggerPockets.com

Fact: The more money you have, the longer you’re likely to live.

Fact: The healthier you are physically, the more money you’re likely to have.

And as a bonus, the healthier and wealthier you are, the more attractive you are to others—which is also pretty nice.

Who doesn’t want be more fit, both financially and physically? Here are some interesting numbers, how to improve both your health and your wealth simultaneously, and how to actually afford all those extra years of life!

The Connection Between Health & Wealth

First of all, here’s a simple graph showing the percent of Americans, by income, who describe themselves as being in “poor” or “fair” health:

The above CDC data show mo’ money, less problems—at least medically.

Skeptics might argue that results are based on self-declared health levels, rather than a medical diagnosis. But who knows your health better than you do?

Besides, longevity data support the trend. Here’s how many additional years a 25 year old can expect to live in different income brackets (relative to the federal poverty line):

Graph courtesy of The Urban Institute

An interesting analysis of a CDC report published in The Washington Post showcased a strong correlation between income and physical activity on the state level. In fact, household income was the most predictive factor of physical activity, beating out career type, alcohol consumption, climate, religion, and urban/rural density. (Amusingly, they even correlated physical activity with presidential voting patterns, but I digress.)

And yes, spoiler alert: physical activity and other lifestyle habits do correlate strongly with longevity, as well. These lifestyle habits can add as much as 14 years to your life expectancy (more on that later).

In other words, money and health are intricately interlinked, and I contend they form a feedback loop. More education, more income, better nutrition, more physical fitness; each of these reinforces the others.

How to Boost Your Life Expectancy

That statistic of a healthy lifestyle adding up to 14 years to your life expectancy? It comes from a study from the American Heart Association.

Here are four lifestyle changes that literally add years to your life.

1. Quit Smoking—Entirely

There is no “safe” level of tobacco consumption. Even at the lowest levels, smoking reduced life expectancies.

In fact, of all the lifestyle factors they analyzed, smoking had the strongest correlation to longevity.

That is actually great news for your wallet, too, because smoking is expensive. Beyond the additional healthcare costs (which Reuters reported amounts to over $170 billion of smoking-induced medical spending every year), cigarettes just plain cost a lot.

At an average price of $6.28 a pack, someone who smokes one pack a day literally blows through $2,292 every year. If you invested that money in the S&P 500 and earned an historically average return, you’d have an extra $39,725.75 after 10 years, $140,905.93 after 20 years, $398,608.57 after 30 years, and $1,054,968.81 after 40 years.

Just imagine if you invested that money in real estate instead?

2. Moderate Your Drinking

The study found that up to one drink a day for women and up to two a day for men did not decrease their life expectancy.

Now, it’s worth mentioning that’s a daily cap, not a long-term average. Going sober during the week then chugging 10 margaritas on Friday doesn’t count as moderate drinking. (Not that I don’t occasionally indulge, but there’s a difference between “occasionally” and “regularly” when it comes to your life expectancy.)

Likewise, booze is expensive. I don’t even want to think about the thousands of dollars I’ve spent on it over the years, and what that would look like compounded over time. But if you have seven drinks at the bar a week, that puts you in roughly the same spending straits as the pack-a-day smoker above.

The habit is essentially a hangover for your wallet, and one that doesn’t disappear by noon, either.

woman with victorious fist in air signifying accomplishment

3. Exercise

No one likes hearing it, but that doesn’t make it any less true. People who work out for at least 30 minutes a day live longer, have lower chronic health problems, lower stress, higher happiness levels, and get to “pass Go” and collect their $200 while they’re at it.

I’m going to share a piece of unsolicited advice: make your workout so ingrained in your daily routine that it becomes thoughtless and requires no willpower. You don’t need to be guilted into brushing your teeth, do you? It doesn’t take any willpower or support groups or moaning. You just do it without thinking, because you’ve entrenched the habit so deeply.

I rotate weightlifting, running, yoga, and other cardio like stationary bike or elliptical when it’s just too painfully hot to run outside. And I entertain myself by listening to audiobooks while I do it, so I actually look forward to working out every day. As a bonus, you can even use this time to listen to educational audiobooks or podcasts, not just novels.

No excuses, no cheat days, no whining. Do it every day, starting with 30 minutes of walking if that’s where you are physically.

4. Cook Your Own (Healthy) Food

I love a good meal out as much as the next person. But meals not prepared by you should fall under the “entertainment” category in your budget, not the “food” category.

You’re effectively outsourcing the labor to someone else, and that labor costs money. But costs aside, meals prepared by businesses are far less healthy.

That’s because businesses have exactly one goal: profit. They don’t care about calorie count or using healthier ingredients. They buy the cheapest ingredients they can that will still yield the right taste.

You, on the other hand, can make your meals healthy, delicious, and cheap. For example, I like lasagna because, well, who doesn’t? But it’s not an inherently healthy dish, so I swap out some of the layers of lasagna shell in exchange for sliced mushrooms. I use low-fat ricotta, and throw some spinach in for good measure.

To save some extra money, I buy dry lasagna shells, not refrigerated precooked shells. And if I want to ease off the red meat, I make buffalo chicken lasagna instead of traditional beef lasagna—healthy, delicious, cheap.

How to Actually Afford a Long Retirement

I’m a huge proponent of financial independence and retiring early (FIRE). But unless you want to live like The Dude in The Big Lebowski, you need some income.

Even if you don’t retire young and work into your 60s, you still need more income than Social Security will pay you. For starters, the SSA sheepishly admitted in 2018 that they’re now cash flow-negative and losing money quickly. Projected bankruptcy date: 2034.

Not that it will come to that. The SSA has been quietly scaling back on benefits for several decades now and will continue doing so. A 2018 study by The Senior Citizens’ League demonstrated that the purchasing power of Social Security benefits has fallen by 30 percent since 2000. And, of course, the jerks in Washington will raise taxes. Their playbook only has two entries: raise taxes and borrow more money.

But I’m getting sidetracked again. Where were we? Oh right, how to pay for a 40-, 50-, or 60-year retirement.

Related: Financial Freedom: 14 Steps to Stop Relying on Your 9-5 Job’s Income

Buy Rentals for Income

I could go on all day about passive income from rentals (and often do). But here are a few fundamentals:

  1. You can leverage other people’s money to build your own income-producing assets, so you don’t need $1,000,000 to create $40,000/year in income following the 4 percent rule.
  2. You can recycle the same investment capital using the BRRRR model.
  3. Rentals generate income without you having to part with the underlying asset (some stocks technically do this with dividends, but don’t expect a 10 percent dividend yield like you can get from rentals).
  4. The underlying asset appreciates in value over time. And even if it doesn’t, your equity still rises, as your tenants pay off your mortgage.
  5. Rents rise alongside inflation, so you don’t have to adjust for inflation when calculating your real returns (unlike bonds).

Got all that?

Related: Does the 4% Retirement Spending Rule Still Hold Up—And Where Do Rentals Fit in?

Buy Equities for Diversification & Long-Term Appreciation

Rentals are great and have even outperformed stocks over the last 145 years, but they come with some drawbacks, too. They’re not very liquid, and they require you to concentrate your money in individual assets—the opposite of diversification.

So, invest in low-cost index funds for diversification. By buying a few key index funds, you can spread your money among thousands of companies all over the world. One company may fall, but others inevitably rise.

And stock markets tend to move differently from the housing market. Just because one rises or dips, doesn’t mean the other will do likewise. In fact, the Great Recession was the exception, rather than the rule, as both dropped together.

Unlike rentals, stocks appreciate fast and generate lower income yields—which again make them complementary.

How much can you withdraw from your stock portfolio each year to live on without worrying about running out of money? According to certified financial planner Michael Kitces (who specializes in this very field), a 3.5 percent withdrawal rate is safe indefinitely (as in, you will never run out of money if you only withdraw 3.5 percent of your stock portfolio’s original value each year).

The only caveat: that’s based on the last 80 to 100 years’ performance. It’s always possible the global financial markets will collapse tomorrow, never to return. Of course, it’s also possible terrorists will set off a nuclear bomb in the city where you own your rentals.

No investment is 100 percent safe. All you can do is calculate returns based on current numbers and long-term averages.

Live Longer, Live Healthier, Live Comfortably

You’re a grownup. You can eat hamburgers every day if you want, smoke a pack a day, and never exercise.

And you’ll live a shorter, poorer life.

Personally, I want to live forever and be a multimillionaire. The same habits help me toward both goals; I don’t have to choose one or the other.

It should also come as no surprise that Harvard research found healthier, wealthier people are happier, too.

For the price of discipline, you can become wealthy, healthy, and happier. It’s a price I’m happy to pay.

What are you doing to make yourself healthier, wealthier, and happier?

Let me know in the comment section!

 

About Author

G. Brian Davis

G. Brian Davis is a landlord, personal finance expert, and financial independence/retire early (FIRE) enthusiast whose mission is to help everyday people create enough rental income to cover their living expenses. Through his company at SparkRental.com, he offers free rental tools such as a rental income calculator, free landlord software (including a free online rental application and tenant screening), and free masterclasses on rental investing and passive income. He’s been obsessed with early retirement since the early 2000s (before it was “a thing”). Besides owning dozens of properties over nearly two decades, Brian has written as a real estate and personal finance expert for publishers including Money Crashers, RETipster, Think Save Retire, 1500 Days, Lending Home, Coach Carson, and countless others.

4 Comments

  1. Katie Rogers

    Other analysts say that with QE and other inducements, future economic returns have been pulled into the present. This means that 3.5% may actually be insufficient. The past history of the last 80-100 years may not hold in the future. A more conservative estimate may ensure that you will not run out of money.

  2. Matt Lawrence

    What a great article Brian, this covers so many elements that I try to improve daily – love it. I really can’t believe there is only 1 comment thus far, this is such an important topic/discussion. Anyway I appreciate your thoughts as usual.

    • G. Brian Davis

      Thanks for the positive feedback Matt! Much appreciated. I agree this is an incredibly important topic, because health and wealth are the two things with the greatest potential to impact your quality of life. As always, thanks for reading!

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