When people think about retirement risk, market downturns usually come to mind first.
But there’s another risk that deserves just as much attention: living a long life.
Life expectancy is often thought of in terms of averages (e.g., age 85 for women). But averages can be misleading when you’re planning for retirement.
Consider the chart below.
If you’re 65 today, there’s a 74% chance at least one member of a healthy couple will reach age 90, and a 44% chance one will live to 95.
In reality, the odds of a long retirement are higher than many people realize.
RELATED: We touched upon spouse protection planning in a recent post, and why planning for a surviving spouse becomes increasingly important when retirement may last decades.
Long Retirements
A retirement that lasts 30+ years can place very different demands on your financial portfolio than one lasting 15 or 20 years.
As retirement stretches into decades, carefully managing your investment strategy, withdrawal rate, Social Security timing, taxes, healthcare costs and inflation can help your savings last longer.
Overall, equities play an important role as the long-term growth engine of an investment portfolio, and we believe they help mitigate the longevity risk most people face.
Curious how long you might need your retirement plan to last?
Here are three longevity calculators that provide different perspectives:
Living To 100: A comprehensive questionnaire (40 questions) based on longevity research that considers health, family history and lifestyle.2
Blue Zones® True Vitality Test: Estimates longevity based on the lifestyle habits common among the world’s longest-living populations.3
Social Security Life Expectancy Calculator: A quick government estimate based on your date of birth and gender.4
Of course, no calculator can predict exactly how long you’ll live. However, they can help put longevity risk into perspective.
If you have any questions, please reach out.
–David Bunker, Financial Advisor & Licensed Fiduciary
Before You Go
Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.
Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.
This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.
Sources:
1) J.P. Morgan Guide to Retirement, https://cdn.jpmorganfunds.com/content/dam/jpm-am-aem/global/en/insights/retirement-insights/guide-to-retirement-us.pdf
2) Living To 100, Scientific Life Expectancy Calculator, https://www.livingto100.com/
3) Blue Zones® True Vitality Test, https://apps.bluezones.com/en/vitality
4) Social Security, Life Expectancy Calculator, https://www.ssa.gov/oact/population/longevity.html