The Longevity Game: Why Your Retirement Plan Needs to Stretch to 90 (or Even 100!)
Retirement. The golden years. A time to finally relax, pursue passions, and reap the rewards of a lifetime of hard work. But before you picture yourself sipping margaritas on a sun-drenched beach, there’s a crucial factor to consider: how long your retirement will actually last.
Gone are the days of planning for a leisurely 10-15 years after leaving the workforce. Today, with advancements in healthcare and a general trend towards longer lifespans, your retirement plan needs to be built to withstand a much longer period – potentially reaching age 90, or even 100!
Why the Shift in Thinking?
- We’re Living Longer: This isn’t just anecdotal; statistics back it up. The average life expectancy is increasing globally. While many may not reach triple digits, planning for a longer lifespan provides a crucial safety net.
- Improved Healthcare: Medical breakthroughs mean we’re not just living longer, but also healthier for longer. Chronic conditions are being managed more effectively, allowing people to maintain a high quality of life well into their later years.
- Underestimation is a Risky Game: Simply put, it’s better to over-prepare than to find yourself running out of funds in your 80s or 90s. The consequences of underestimating your retirement needs can be devastating.
The Challenges of a Longer Retirement:
Planning for a longer retirement isn’t just about having more money. It requires a more nuanced and strategic approach to your finances. Here’s what you need to consider:
- Inflation: The longer your money needs to last, the more impact inflation will have. Your retirement plan needs to account for the rising cost of living over several decades.
- Healthcare Costs: As we age, healthcare needs typically increase. This can include everything from routine checkups and medications to potential long-term care. These costs can quickly eat into your savings.
- Market Volatility: The stock market can be unpredictable. A long retirement exposes your investments to a greater risk of market downturns, which can significantly impact your portfolio.
- Unexpected Expenses: Life throws curveballs. From home repairs to family emergencies, unexpected expenses can derail even the most carefully laid plans.
Building a Retirement Plan for the Long Haul:
So, how do you create a retirement plan that can withstand the test of time? Here are some key strategies:
- Start Early: The power of compounding is your greatest ally. The earlier you start saving, the more time your money has to grow.
- Maximize Contributions: Take full advantage of employer matching programs and contribute as much as you can afford to your retirement accounts.
- Diversify Your Investments: Don’t put all your eggs in one basket. Spread your investments across different asset classes, such as stocks, bonds, and real estate, to reduce risk.
- Consider Annuities: Annuities can provide a guaranteed stream of income throughout your retirement, offering a safety net against outliving your savings.
- Factor in Healthcare Costs: Research healthcare options and costs in retirement. Consider purchasing long-term care insurance to protect against the potentially devastating costs of assisted living or nursing home care.
- Plan for Inflation: Choose investments that have the potential to outpace inflation.
- Regularly Review and Adjust: Your retirement plan is not a set-and-forget document. Regularly review it with a financial advisor and make adjustments as needed based on your changing circumstances.
The Takeaway:
Planning for retirement until age 90 (or even 100) might seem daunting, but it’s a necessary step in securing your financial future. By understanding the challenges and adopting a strategic approach, you can increase the likelihood of enjoying a comfortable and fulfilling retirement that lasts as long as you do. Don’t gamble with your future; embrace the longevity game and plan for the long haul. Your peace of mind will thank you for it.
LEARN MORE ABOUT: Qualified Retirement Plans
REVEALED: How To Invest During Inflation
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HOW TO INVEST IN SILVER: Silver IRA Investing
❤❤❤❤ very very sexy
I heard life expectancy for is male in the US is 78.
I don’t see spending a lot of money in my 80’s except for health care
How about the model that doesn't touch the principal? And most of us will not even see 90 and if we do there are other remedies at that point.
Unless you're rich….. no matter what the average person does…they STILL will run out of money. What's the average number of 70 years olds only last 5 more years?
And ERIN, I need you to be here to advise us til 2200 ! So take your supplements!!
I’m planning on 150! My NVIDIA shares should get me there! Just hope I can still recognize my children! Haha !!
Thats why have a myga cd then an annuity.
This is one of my very real concerns and am actively planning around this. Many in my family have made it to very late 80s to early 90s. I’m hoping I got the good genes and make it this far. However, I am truly aiming for 100 since I’m a bicentennial baby and that would just be so cool to span two centennials of the great US of A!
Thanks Erin! ❤
try to structure your portfolio to provide enough dividends and interest to cover whatever SS doesn't. keep 3 years equivalent of these dividends in a MM account to cover any large expenses you may incur. this will help protect you from sequence of returns risk and protect your principal.
Annuity and LTC insurance. Everyone needs them.
It's not just the unknown life expectancy. It's also the cumulative effect of inflation over the years. It snowballs, gobbling up my buying power.
Retire at 60, aim to zero out retirement savings at 85, by that time SS will cover my base expenses. My $1M , debt free home , assuming a return of 4% above inflation will be worth $2M in todays dollars. Can sell or down size, $2M at 85 will crush rest of my years.
You can't run out of money when you still receive Social Security you just have to cut down expenses and adjust and is proven by government studies
You'll be eating food out of a blender and having your diapers changed at the end of your life. Retire early and enjoy the early years of retirement!
I retired in 2008 at age 50. I’m now 67 and I started Social Security a few months ago. Now let me tell you something really amusing. When I stopped working (involuntarily at first), the projections from Fidelity showed I would effectively be out of money at this age. Now the Fidelity projections show I’ll be a multimillionaire (even adjusting for inflation) at age 95, even assuming a poorly performing market. I really like Fidelity for investments (and no they don’t pay me to say this), but this just goes to show all these projections and analyses about when you will or won’t run out of money and planning for any time period other than a few years are mostly worthless. All you can do in my judgment is invest in a diversified portfolio of equities and some laddered fixed income assets (avoid bond funds) together with a few commodity type investments (gold, platinum, etc—but not a large portion of your investments), and inflation indexed bonds which guarantee a return plus inflation. You might get hit by a truck with an uninsured driver and need home health care and expensive physical therapy, or get a serious illness like Parkinson’s disease and end up in assisted living and then a nursing home for years at $120,000 or more per year and rising by 10% per year and you will likely effectively run out of money unless you start out with ten million dollars. Just use common sense and don’t let paranoia about running out of money in 20 or 30 years prevent you from doing what you really want to do and enjoying yourself and your family while you still can physically and mentally.
Always a good idea to hedge a bit. I use age 100, just in case. I’d rather leave a little on the table than broke at 95! The other thing to consider is you may not make that age but what about your spouse?
Statistics are meaningless to your own personal health. First – look at your family longevity history. At what age did they die ? Next up – you know your own health and medical history right ? You get regular physicals and blood work ? You can even go for one of those comprehensive blood work and full body MRI places to get a head to toe health assessment. In my case I will retire at 65 and living to 80 is what my history tells me. 15 years of retirement Being alive at 85 would be a major shock at 20 years of retirement. My home value will be my back up plan if needed.
MYGA and CD IRA and Bonds and other principle preserving strategies make a ton of sense. Add in a growth bucket of 20% of the portfolio. Social Security and Medicare is going to keep the money flowing until breath stops.
I took early retirement 8 years ago and I’m telling you live off of dividends and options income. Check out dividend aristocrats, and Kings. And stop trying to live off the 4% rule…. And selling shares to pay the bills.