We all want to live a long, healthy life and thanks to developments in modern medicine, Americans are living well into their 80s and 90s on a regular basis. Life expectancy has increased by nearly a decade since 1970, and there’s no reason to believe that trend won’t continue into the future.
While it’s wonderful that people are getting the chance to enjoy more time with family and friends, longevity can actually become a risk to your retirement. It might not be the first risk you think about in financial planning, but it’s one that could end up causing you the most anxiety later in life if you aren’t prepared.
Just think about how different your retirement might be from your parents or grandparents. Having to prepare for 5, 10, or maybe even 20 additional years will take a lot more diligence and discipline, which is why we take it very seriously when working with a client.
The first step you need to take with your financial plan is to make sure you’re building it with the assumption that you’ll need your money to last for decades. It’s no longer appropriate to create a plan to accommodate a five to 10-year retirement like it might have been for previous generations. Instead, you should be saving and investing with the idea that retirement could last 20-30 years.
Not only will your savings have to increase, but you’ll want to put an income plan in place with a financial advisor that will ensure you’ll have the best chance at a successful retirement. Don’t overlook this critical piece of the puzzle.
The greatest fear for every retiree is running out of money and the risk of longevity amplifies that worry if you lack preparedness. You never want to face the possibility of being forced to work again or have to make tough decisions about what you can afford to spend your money as you grow older.
That’s why a proper financial plan has never been more important than it is now as we live longer and longer. Knowing that you’ve created a plan that’s meant to last will enhance your quality of life and allow you to enjoy the extra years in retirement.