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 with a longer life-expectancy in mind or thinking about financial longevity.
There are serious consequences to financial planning around the wrong life expectancy. 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 hoped. No one wants to run out of money in retirement.
Planning with the Proper Financial Longevity in Mind: 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, you as an American can expect to spend about 20 years in retirement.
However, there is a strong chance that you should plan to 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.Do you have a financial plan in place to be prepared for three decades of retirement? Most people don’t.
With these figures in mind, here are 3 steps that can be taken to better ensure your financial longevity:
Step 1) Develop a Clear Vision of Your Retirement Lifestyle
To create a well-conceived plan with financial longevity in mind, and the commitment will to faithfully execute it, you need a clear financial vision of your lifestyle in retirement. Start by defining your financial goals and asking yourself:
- Where will I live?
- Where will I travel?
- What will I drive?
- How will my hobbies change?
- Where will I donate my time and money?
To accomplish financial longevity, It’s important to factor realistic spending assumptions into the cost of your retirement, based on your financial goals and desired lifestyle. Your financial plan should also include contingencies for health care costs and unexpected expenses.
Step 2) Adjust Investment Strategies
Start to plan for a longer retirement and financial longevity by adjusting your investment strategies — like saving more, being slightly more (or less) aggressive with your investment strategy, etc.
Our expert financial and investment team at Hudson Companies ensures that our clients have these financial bases covered. Contact us if: we’re experienced in retirement planning if:
- You are within 5 years of retirement
- You have recently experienced a significant change in your income
- Your investment accounts are exposed to higher risk due to natural market fluctuation
- You aren’t confident that you are still on-target for your retirement or legacy goals
- You feel insecure about your financial longevity
Step 3) Consider Health Insurance Options
Health insurance may be 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 you are covered by Medicare and other supplemental insurance plans, there are still substantial costs left for you to pay.
In addition to
- premiums,
- deductibles, and
- co-pays,
prescription drug costs are likely to rise.
In the last decade, the average annual cost of one brand-new drug used to treat chronic health conditions cost a senior $5,800 (2015), compared to $1,800 less than a decade earlier (AARP). Financial planning for a longer retirement requires keeping a keen eye on the rising cost of healthcare in the US.
Takeaway
Our expert financial team at Hudson Companies understands the stresses that come with ensuring your financial longevity and is here to help you sort out the complications of an ever-changing financial plan.
Contact us for an expert review of your financial retirement, legacy, and estate plans. Together, we can create a clear financial strategy that will point you toward a well planned and comfortable retirement.
