Living Until Age 90? Retirement Planning for Longevity

by | Oct 19, 2016 | News Room, Retirement, Senior Benefits, Social Security, Uncategorized

Are you financially prepared to live into your 90s? Will your retirement savings stretch as long as you might need it? Americans are living longer today than ever before. With increased longevity, some financial planners believe it makes good financial sense to plan for age 95, according to an article published last week in USA Today.

Data from the Centers for Disease Control and Prevention indicates average longevity has increased since 1950: A man who was age 65 as of 2014 might live to age 83 on average, while a 65-year-old woman might live to age 85.5.

The key, financial advisers say, is to ensure older adults don’t outlive their retirement funds. Because of increased longevity, financial advisers are creating clients’ retirement plans on the assumption that men might live to be 91 on average, with an average lifespan of 94 for women.

Actuaries acknowledge this calculation method isn’t perfect. After all, “one-half of older adults will die before average life expectancy, and the other half will die after,” USA Today reports. Regardless, the statistics show this issue could be a concern for couples: Even if one spouse dies earlier, there’s a 25-percent chance the surviving spouse might live to age 98, the Society of Actuaries says, and that spouse will need funds. With this in mind, David Blanchett of Morningstar Investment Management recommends clients aim for “a fixed-time horizon, such as planning to age 95.”

The USA Today article recommends the following strategies:

  • “Couples should consider their combined planning timeline.” It’s more likely that the wife will outlive her husband, so savings should be planned to ensure she, as the surviving spouse, has sufficient funds for the long term.
  • “Consider your genes and behavior.” Retirement plans should include both the factors that are in your control and those that are not.
  • “How will you manage your longevity risk?” Annuities, asset-drawdown plans, delaying Social Security to age 70 and a reverse mortgage are tactics older adults can use to avoid outliving their retirement funds.

See USA Today’s complete article, For Your Retirement Planning, Count on Living Until Age 95, on their website.

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