Our life expectancies are rising in this era of advanced medicine and technology. Recent research by Harvard scientists suggest that the first person to live to 150 may have already been born, with the reality of age reversal gaining traction.
Longer lives means longer retirements and longer retirements means an increased need for savings and lifetime income. Below are a few considerations for preparing for a lengthy retirement.
Extending Your Working Years
When the Social Security system was founded in 1935 and age 65 was chosen as the standard age of retirement, life expectancy was much lower than it is today.
Today, a retirement at 65 can mean living on retirement accounts for upwards of 40 years.
Before rushing into retirement, consider how capable you are of working. Do you have the capacity to continue working and adding to your savings for another 5-10 years? Could you work part-time or pursue consulting opportunities, utilizing your experience without over-exerting yourself?
Inflation
Accounting for inflation when executing financial planning is crucial. Over time, your savings will lose value, meaning you will need more income to maintain the same standard of living year over year.
Considering a 3% inflation rate is a great place to start. After 30 years, upwards of $300,000 could be needed to maintain a lifestyle that began at a $125,000 income [2].
Goal-Oriented Savings
Though traditional advice suggests saving 10% of your yearly income, aiming for 15-20%, if possible, can go a long way towards beefing up your cash reserves.
For emergencies and worthwhile investment opportunities, having substantial cash reserves can go a long way towards protecting and adding longevity to your retirement savings.
Utilizing technology to budget, track spending, and point out ways in which funds can be redirected can also be beneficial.
Diversification
Diversifying your portfolio is age-old advice. You never want all your eggs in one basket, or too few.
Your portfolio should span different risk levels and the amounts you have in these different areas should be determined by your personal financial situation. Working with a financial professional that can take in the big picture of your unique retirement goals and circumstances and tailor your investment strategy accordingly is an important step in achieving a portfolio that supports growth, income, and safety.
Health Care
As we age, our need for health care often increases. Without proper long-term care insurance or savings in an HSA (health savings account), health care costs can become a burden that derails your retirement.
A longer life-span could mean longer lists of medical bills. Taking this into consideration and/or discussing with a financial professional how best to account for these potential costs can make or break a retirement roadmap.
Maintaining Flexibility
The speed at which the world around us is changing means you need to be able to adapt to new circumstances at any given time. Planning for your retirement, no matter how soon you begin and how much money you save, doesn’t always mean that your golden years will be nothing but golden.
Remaining vigilant in protecting your assets and being willing to make lifestyle changes as needed can be crucial to ensuring the longevity of your retirement. Being open to taking on part-time work or an outside voice on your financial circumstances can be the difference between living comfortably and confident in your retirement years or living under the stress of uncertainty.
Navigating the realities of retirement can be complex and feel unmanageable at any stage of life, whether you are retired or are merely considering the future. An experienced financial professional can walk you through what you will likely need to best fulfill your retirement goals and they can assist with making recommendations for alterations to your lifestyle that will help meet these goals.
Financial professionals can discuss how factors like inflation and health care costs will impact your investments in the future and through decades of experience, can walk you through the oncoming and duration of your retirement years.
To schedule a complimentary financial review with Moore’s Wealth Management, click here or call our office at 770-535-5000, where a staff-member is awaiting your call Monday through Friday, 9AM to 5PM.
Sources:
[1] https://news.harvard.edu/gazette/story/2023/01/has-first-person-to-live-to-be-150-been-born/
[2] https://www.kiplinger.com/retirement/financial-planning-and-increasing-longevity
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Diversification does not assure a profit or protect against loss in a declining market.
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Since long term care insurance are medically underwritten, you should not cancel your current policy until your new policy is in force. A change to your current policy may incur charges, fees and costs. A new policy will require a medical exam. Surrender charges may be imposed and the period of time for which the surrender charges apply may increase with a new policy. You should consult with your own tax advisors regarding your potential tax liability on surrenders.
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