Over the past several decades, breakthroughs and innovation in medicine, fitness and nutrition have resulted in people living longer than they ever have before. In fact, the Centers for Disease Control and Prevention found there’s a record number of people in the United States over the age of 100.1 A Pew report shows the number of 100-plus-year-olds worldwide will increase eightfold by 2050.2
It’s great that people are living longer, but a long life span can also present unique challenges. For example, you may need to plan for a longer retirement. It’s possible that your retirement could last 40 years or more. If you’re not prepared for that, you might find yourself in a tricky financial situation later in life. Below are a couple of things to consider as you prepare for a long retirement:
Don’t be too conservative.
Many retirees want to limit potential investment losses. That desire is natural and understandable. After all, a market downturn could impact your ability to generate income and support your lifestyle.
That said, you also don’t want to be too conservative. You will likely need your retirement funds to grow to keep up with inflation and to last for decades. Growth potential and risk often go hand in hand. Rather than avoiding risk altogether, you may want to develop a strategy that strikes the right balance between growth potential and risk management. A financial professional can help you find that balance.
Look for guaranteed* income streams.
Most retirees’ only sources of guaranteed lifetime income are Social Security benefits and possibly pension payments. Outside of those two income sources, though, many retirees rely on money that comes from their savings. Very often, those retirement savings distributions are not guaranteed.
It might be beneficial for you to find sources of guaranteed income outside of your Social Security or pension benefits. For example, an annuity is one tool that can often be used to generate guaranteed lifetime income. There are several different types of annuities that can provide lifetime income in a variety of ways. The amount of income you receive depends on the terms and features of the specific policy.
Consider delaying Social Security benefits.
Many retirees believe they should start taking Social Security benefits as soon as they become eligible at 62. The truth is you may be better off waiting past age 62 or even later to file. In fact, it’s possible to delay filing up to age 70.
Why would you want to delay your benefits? The primary advantage is that for every year past your full retirement age (FRA) that you delay claiming your Social Security benefits, you get an 8 percent increase in your benefit amount.3 For example, if your FRA is 66 but you delay taking your benefits until age 70, you’ll receive a 32 percent increase in your Social Security benefits. This extra income can be especially helpful if you have a long life span.
Ready to plan for a long, happy retirement? Let’s talk about it. Contact us at Benefit Resource Partners. 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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