Retirement Strategy: Money & Longevity
Laurence Hale, AAMS®, CRPS®
Principal/Managing Partner, Investment Advisor & Chief Investment Officer
When considering your retirement strategy, how much thought do you give to how long you might live? It can be an uncomfortable reality to consider, but this shouldn't dissuade you from giving it some serious thought.
For many people preparing for retirement, one of the biggest fears is running out of money. If you've lived to 65 years, you will probably live to at least 84 years if you're male and 87 years if you're female, according to Social Security tables.
These are only estimates, but it's important to keep in mind that you might live much longer than you expect, and some household members could outlive others by many years.1 You might, in fact, live to 100 years and beyond: the National Institute on Aging anticipates that the number of centenarians will grow by a factor of 10 during the first half of this century, representing a host of challenges for anyone attempting to devise a retirement strategy.1
Healthcare Costs
For example, healthcare costs must be incorporated. As you age, your healthcare needs will likely grow from simple doctor's visits to potentially living in an extended care facility. These costs naturally increase over time, whether through inflation, market volatility, or other factors. So, while you can look at today's prices as a guide, you will likely need much more money to cover your healthcare. Medicare will help, but it doesn't cover everything, including a lengthy stay in extended care.2
Pursuing Your Interests and Living Well
Your retirement strategy might include a spending plan that considers the likelihood that you will want to travel, pursue your interests, and spend time with family, as well as that allows for a long life and covers the associated financial expenditures. Unless you are working beyond retirement age, it can be difficult to make up for a market dip, emergency expense, or heavy spending, so your strategy should cover many circumstances.
How much will you need to withdraw per year without diminishing your account too quickly, while still controlling for inflation and other factors? Calculating this as part of your retirement strategy may be essential. While some financial professionals have downplayed the 4% rule in recent years—the amount of your investments used in the first year of retirement—and have revised it upward or downward as needed, the theory is that you may be able to live on your retirement funds for upwards of 30 years or more.3
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Other Factors to Keep in Mind
Other factors to consider include focusing on tax-efficient withdrawals from your retirement accounts. You might also decide that working longer or taking Social Security later (allowing for larger payouts per month) could extend your retirement strategy further. Of course, these topics and others will be addressed while working with a financial professional to form a retirement strategy and put it into action. If nothing else, you should now appreciate what a significant undertaking your retirement strategy represents, as well as how relieving it will be to have help along the way.
With the help of good financial planning, you can mold your life to look exactly how you want it to with a great retirement strategy. Here at Weiss, Hale & Zahansky Strategic Financial Advisors, we can help you make this retirement plan a reality using our Plan Well, Invest Well, Live Well™ process. You can request a complimentary consultation on our website or call us at (860) 928-2341.
Presented by Principal/Managing Partner Laurence Hale AAMS, CRPS®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084. 860-928-2341. www.whzwealth.com.
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