People are living longer than ever, thanks largely to advances in medicine, health care technology, and nutrition. According to the Centers for Disease Control and Prevention, the number of people in the United States who are age 100 or older is at a record high.1 Pew Research Center found that the number of centenarians globally will grow eightfold by 2050.2
Most of us hope to live a long, happy, and healthy retirement. Unfortunately, the downside to a long retirement is that it can put a strain on your finances. If you retire in your late 50s and live to be 100 or older, it’s possible your retirement could last 40 years or more.
Fortunately, there are steps you can take to manage longevity risk. Below are a few steps you can take to prepare for an extra-long retirement:
Don’t be too conservative.
It’s natural to want to avoid investment losses in retirement. After all, a downturn in the market could hurt your ability to take withdrawals and support your lifestyle. However, you can’t avoid risk completely. You will likely need to grow your savings so you can fight inflation and make your savings last. Growth and risk often go hand-in-hand. If you’re too conservative, you may not get the growth you need to meet your goals.
You might want to consider working with a financial professional, who can help you develop a strategy and identify tools that balance risk protection with growth potential. For instance, a financial professional may recommend an annuity, which can often accomplish both of those goals.
Develop guaranteed* streams of income.
For most retirees, their only guaranteed sources of income are Social Security and maybe a pension. While these are good sources of income, you might want to consider finding other vehicles that can ensure you will have steady cash flow for the rest of your life, no matter how long you live.
For instance, certain types of annuities can provide a guaranteed stream of income for life. The amount you will receive usually depends on your specific policy. A financial professional can help you decide which annuities, if any, are right for you and your retirement.
Delay Social Security.
Just because you become eligible for Social Security at 62 doesn’t mean you should file then. You don’t even have to file for benefits when you reach full retirement age (FRA), which is between the 66th and 67th birthdays for most people. In fact, it’s possible to delay your Social Security benefits all the way until age 70.
There are benefits to delaying. For each year past your FRA that you delay filing, you’ll receive an 8 percent increase on your benefits.3 That means if, for example, your FRA is 66 and you delay taking Social Security until age 70, you get 32 percent more income, or 8 percent for each of the four years you delayed. This boost in income can be extremely useful and go a long way toward making sure you have enough to make your retirement last for 40 years or more.
Ready to plan for a long, happy retirement? Let’s talk about it. Contact us at Carstens Financial Group. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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