Look just a little closer at the photo and notice the number ‘90’ on the carrot cake. My grandparents were looking pretty good at my Granny’s 90th birthday, weren’t they! They went on to live another 5 years, all but the last year in amazingly good health.
Just like my grandparents, Americans are living longer. That’s the good news. The bad news is that most people aren’t financially prepared. Many Baby Boomers will be in retirement for over 20 years and unfortunately, many aren’t saving and investing with a longer life-expectancy in mind.
There are serious consequences to financial planning around a life expectancy that is too short. Some retirees are working later in life; others live in fear of running out of money, while others are leaving less of a legacy than they had hoped. No one wants to run out of money in retirement. By incorporating Biblical wisdom alongside of sound investment management and financial planning principals, we can help you gain clarity with your retirement plan, whether retirement lasts one decade or three.
How Long Should You Expect to Live?
The Social Security Administration notes that at 65-years old, the average man can expect to live to roughly 84.3 years of age, whereas the average 65-year old woman can expect to live until age 86.6. This means that on average, Americans can expect to spend about 20 years in retirement.
However, there is a strong chance that you will be in retirement much longer than 20 years. One out of every four 65-year olds will live past the age of 90, and one out of every 10 will live past the age of 95. Are you prepared for three decades of retirement? Most people aren’t.
With these figures in mind, here are 3 steps that can be taken to better plan for your financial longevity:
Step 1) Develop a Clear Vision of Your Retirement Lifestyle
To create and execute a well-conceived plan, you need a clear vision of your lifestyle in retirement. Start by defining your goals and asking yourself:
- How much is enough to support my envisioned lifestyle?
- What will excite me about getting up every morning?
- How will I feel about not going to work and how will I replace the relationships I valued for so long?
- How will I fill my calendar every day? Every week?
- How can I be the best steward of my time, talents and money?
Step 2) Adjust Your Investment Strategies
Start to plan for a longer retirement by adjusting your investment strategies — like saving more, being slightly more (or less) aggressive with your investment strategy, etc. We help our clients cover these bases, so consider calling us if you’d like someone to review your investment strategies if:
- You are planning for retirement
- You recently experienced a change in your financial status
- You recently received or expect an inheritance
- You are already retired but aren’t confident that you have enough
- You want to review your legacy goals
Step 3) Consider Your Health Insurance Options
Health insurance is the most expensive and bothersome insurance the average individual carries. Unfortunately, many people approach retirement and believe that the burden of health insurance will be lifted. In reality, even when covered by Medicare and other supplemental insurance plans, there may be substantial costs left for the individual to pay. In addition to premiums, deductibles, and co-pays, prescription drug costs are likely to rise. Planning for a longer retirement requires keeping a keen eye on the rising cost of healthcare in the US.
Any opinions are those of Jeff Blaser and not necessarily those of RJFS or Raymond James, and are subject to change without notice. Information contained herein was received from sources believed to be reliable, but accuracy is not guaranteed. Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success.