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Are you ready to live 1/3 of your life in retirement?

Longevity Planning- Are you ready to live 1/3 of your life in retirement?

Will we have enough if we live to age 95 or beyond?

A truth of this modern age is that more of us are living longer, if you retire at age 65 and die at age 95 you will have 30 years of life in retirement.

30 years…

A very common fear I hear from my clients as they near retirement is that they will run out of money and that’s before they ask themselves some important questions.

  1. Can you imagine living beyond age 95 or even beyond age 100? You should think about that issue since it is a strong possibility for you or your spouse.


  1. Do you know how much medical care will cost- health care, prescriptions or health insurance premiums for you and your spouse if you live to your 90’s… or older?


  1. You have resources now, but is it enough for extreme old age? Should you be taking more risks later in life to accommodate your needs in your 90’s?


  1. Pensions are quickly becoming a thing of the past; can you live comfortably without it? In an era when very few have a true pension plan, have you developed guaranteed lifetime income strategies, or even considered the implication of a market downturn during the early years of your retirement, or several during your retirement years?


  1. Do you know how a Long Term Care event will affect your family? Have you determined the financial harm to your families’ long term security if you end up spending significant funds for long term care needs such as nursing home or home health care?


  1. Have you talked to your adult kids about this yet? People often times wait too long or never talk to their kids about these topics, but it is so important. If your children have to take care of you physically or financially this may impact their own retirement planning. While you are having this conversation, it is also very important that you simply tell your children what your wishes are. They can not know how you want things done if you do not tell them. This conversation, while uncomfortable, can be a great gift to your children. It allows them to do what you would want, and not to have to second guess their judgement later, alone or to the various family members that will have opinions later.


Why do we all need to pay attention to these longevity and retirement planning considerations?

 Short answer: People are living longer.

In the January 21, 2016 New York Times wrote an article "Centenarians Proliferate and Live Longer", detailing how the number of 100+ year olds has risen tremendously, they wrote  “There were 72,197 of them in 2014, up from 50,281 in 2000, according to the report by the Centers for Disease Control and Prevention. In 1980, they numbered about 15,000.”


The 2014 Society of Actuaries Mortality Table further states that there is a 60% chance that at least one member of a male-female couple now, age 65, will survive until age 90, 31% to age 95, and 8% to age 100. And if you do live much longer than expected, are you certain that you will be able to yearly withdraw 4% of your retirement nest egg and not run out of funds? 

At the opposite end of the spectrum,  while most pre-retirees think they will continue working past age 65,  the reality is the opposite. The 2015 EBRI Retirement Confidence Survey stated that: 

1-60% of those Pre-Retirees left the workforce earlier than they planned due to Health Problems or a disability, while 

2-22% left their job to care for a family member and typically they were not prepared.

3-Only 23% of current retirees were able to retire at age 65 

If you are living much longer, but can’t work much later… what are you to do?


 Nothing in life is guaranteed, but death and taxes,” Benjamin Franklin

Here is another financial consideration to ponder...increased taxation.

We are living in a unique pollical climate, one that has already shown a willingness to cut benefits and raise taxes. One that has talked about our national debt of nearly $19 trillion and our need to pay it down. In this uncertain pollical climate the only certainty is change.

How do we prepare for uncertainty?

“We can’t control the future but we can prepare for it.”


Steps we can take right now to prepare for our future.

  1. Save more by spending less...thus reducing our current debt
  2. Social Security Planning- Pre-retirees need to analyze the best time to take social security benefits under current law, or even prepare for dismissed SS payouts
  3. Maximize Work Benefits- All of us must maximize the amount we save into our employer retirement plan.
  4. Pay Down the Debt-We should consider accelerating our mortgage payments, so we head into retirement without mortgage debt
  5. Don’t just have a policy, have an insurance strategy- We need to own personal Whole Life or permanent life insurance to help support our spouse or children and grandchildren, now or during our retirement years. You can protect your cash flow, your paycheck with disability income insurance policy- it’s all customizable and should be part of a plan.
  6. Insure against long-term care costs-We need to have a strategy in place to address long-term care planning needs that can help to prevent the liquidation of our retirement assets, which could have a significant impact on the financial security of our surviving spouses or our adult children.
  7. Prepare for Medical costs- Sadly, we must prepare for increases in health care costs during our working years and during retirement...thus less government financial support of Medicare or Medicare reimbursements
  8. Have a proper distribution plan- A proper distribution plan includes taking money out in a tax-advantaged way, knowing where to draw money from first and if we are living longer than originally planned for, then we must reduce the distribution percentage we take from our retirement plans.
  9. Create our own pension- We must consider using fixed and variable annuities, immediate annuities, and deferred income annuities to create a guaranteed lifetime income
  10. You don’t cut your own hair, why would you DIY your finances? Work with professionals- a planning team or a selected key advisor to analyze today where we are financially where we want to be and discuss these facts with our adult children, so the family can prepare for collective and personal family financial fitness and independence.