Are You Prepared for the Challenges that Come with Longevity?

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longevity and retirementThanks to modern medicine, and an overall increased quality of life, people are living longer and longer. Indeed, the current life expectancy for someone in the United States is 81 years for women and 76 years for men (that’s from birth).

That’s quite an increase from 1950, when the average life expectancy at birth was 68.2. We’ve even seen increases since 1980, when average life expectance was 73.7. And, of course, if you live to 65 or 75, the chances that you will live to reach 80 years old — and beyond — goes up.

While it’s nice to think that you could live into your 90s fairly easily, the reality is that longevity brings with it some other issues, especially when it comes to retirement planning.

Retirement Planning and Increased Longevity

“The average person must now plan for a retirement that could last 20 to 30 years,” says Rich Winer, retirement planning expert and president of Winer Wealth Management.

Back in 1950, if you retired between the ages of 60 and 65, you only had to rely on retirement income for a few years. Now, you need to plan for decades. And if you are interested in early retirement, at age 40, you could be looking at 40 years — or more — of retirement.

From needing to cover your daily expenses on a long-term basis, to dealing with the realities that come with failing health as you get older (and linger on in ill health), it’s vital that you put together a plan that can address the issues that are cropping up as a result of increased longevity.

“Establish a plan to accumulate what you need for retirement,” Winer suggests. “This involves considering how much you currently have saved for retirement, how much you will need to save, and investing on a regular basis to meet your retirement goals.”

It’s important to consider what rate of return is required in order to reach your retirement needs. Bob Richards, a retired financial advisor and CPA, and the publisher of a retirement blog, points out that when planning for a long retirement it’s vital that you consider equities as well. “Longevity means that more of a retirement portfolio must be equity investments that tend to appreciate over time, and also supply an increasing income over time,” he says. “If one were to simply buy some fixed income investments such as CDs and bonds, they will never keep up through a long retirement.”

On top of planned wealth accumulation and judicious investing, Winer also recommends long-term care insurance. “As health care costs continue to rise, they will become the biggest threat to people’s retirement security,” he points out. “Those without long-term care insurance run the risk of depleting their retirement savings to meet their medical costs.”

As you plan your retirement, don’t forget to think about the consequences of a decades-long retirement. Building up income streams, and protecting yourself with the right insurance policies, can go a long way toward making sure that your dream retirement doesn’t turn into a nightmare the longer you live.

(Photo: schnaars)

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8 Responses to “Are You Prepared for the Challenges that Come with Longevity?”

  1. dmosinee says:

    “Back in 1950, if you retired between the ages of 60 and 65, you only had to rely on retirement income for a few years.”

    This is not true. The article correctly states, “…1950, when the average life expectancy at birth was 68.2”, but a huge component of that statistic is the infant mortality rate, which was much higher in 1950 than today. The text makes it sound like the average person retiring at 65 in 1950 would only expect to live 3 more years, which is preposterous.

    It’s true that modern medical advancements are extending retirements, and they require more planning than they used to (although there are plenty of components to that besides living longer), but not at the extreme rates that comparing ‘from birth’ life expectancies would indicate at first glance.

    • dragonflower says:

      I disagree with dmosinee. Infant mortality was not horribly high by the 1950s in the USA, compared to how it was in the 19th century. We had antibiotics and hospital births as a matter of course by the 1950s.

      The true barometer of longevity would be to look at all of the obituaries of a given year to see what the average age of death was for adults. I would not be surprised to find that it was about age 68 in the 1950s.

      In fact, when Social Security retirement was passed, it was with the assumption that most people did not live beyond 70. Two years ago, the average person in the US died at age 78. It is no wonder that there has been concern about the SS fund going bankrupt due to the length of payout years increasing beyond what was originally anticipated.

      Medical science has become much more aggressive about treating diabetes, hypertension and high cholesterol – chronic diseases that would have killed many people by their 60s a few decades ago. The ability to keep these diseases under control has been a significant factor in extending our life expectancy.

      However, most people still die between 70 and 80 years in this country. This has not changed in 3000 years when the psalmist wrote in Psalm 90 that “the lifespan of a man is 70 years, 80 if he is strong” (paraphrased). Maybe the psalmist knew something that we don’t want to admit in our death-denying culture.

  2. Michael says:

    And don’t forget to take care of yourself… While there are no guarantees, living a healthy lifestyle can greatly reduce you healthcare costs as you age — and make your golden years more enjoyable.

  3. This is a good point. I think in this day and age its best to plan on a retirement that can provide for you in perpetuity.

  4. elloo says:

    I am looking into long term care insurance. Yikes! Big premiums! But the longer you wait, the more expensive it is. It’s more than likely not going to pay for 100% of your expenses that Medicare doesn’t cover, but it will help preserve a chunk of your assets if you fall in the $250,000 – $2,000,000 net worth group. If your net worth is lower than this range, don’t bother. There is Medicaid and the like to help you. If higher, don’t bother because you will be in a position to self-fund.

  5. All the time I hear people say they will have to work until they are 70 in order to afford to retire. What they don’t think of is their health. Will they be able to work that long? If they are not taking care to eat right and exercise, etc. they might not be able to physically keep doing the job they do now.

    Plan financially, but also prepare to be as healthy as you can to live well in your “golden years.”

  6. bloodbath says:

    I’ve been in retirement for 9 years and I’m living the life I planned for.
    I started saving at age 18 and never stopped but I started consciously saving for retirement when 401k was introduced, saving the maximum allowed for most years. I currently live on SS$ and a small pension and rental income, have no debts, own my home and car and I have discretionary funds too.
    My advice: Start early save consistently and never withdraw from it.

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