Here’s to a Good Long Life—Just Be Prepared Financially

Are you financially prepared to live to 100? Many Baby Boomers are not. However, as a nation, we are living longer than ever, and our savings should reflect the possibility that we might live longer than we planned.

According to the Social Security Administration, about one in four people turning 65 today will live to 90 and beyond. One in 10 will live past 95. And even if we do not reach our 90s, the average man turning 65 today will live to see 84; the average woman, 87.

With two decades or more after retirement to enjoy, you want to make sure you really can enjoy it, and crucial to this is reducing your risk of outliving your money.

Here are some steps to help make sure your long life is a good one.

Steps to Save for a Long Life

Determine your life expectancy: When deciding how much you need to save, you should start with your life expectancy. An online calculator can help you with that determination. The Social Security Administration, for example, offers a basic calculator that shows the average number of additional years a person can expect to live based on their gender and date of birth.

While drawing on national averages, Social Security’s calculator does not take into account your specifics, like your health or lifestyle. A search of the internet, however, will turn up calculators that do. The calculator is a popular option. Linked to the New England Centenarian Study, it gives you a number based on factors ranging from your relationships to your flossing habits.

Adapt your retirement plan: After you figure out your potential life expectancy, you should consider adjusting your retirement plan to reflect your longevity. You may need to save more aggressively, changing your investment allocations or cutting expenses so you can reduce portfolio withdrawals. (A financial planner can help you with these calculations.)

Your possible life expectancy can also affect decisions about when to take Social Security benefits. For example, if you have a shorter life expectancy than average, you might consider collecting benefits sooner. But if you expect to live to 100, you may want to put off claiming benefits for as long as possible so that you can get a higher monthly check once you do start drawing benefits.

Finally, take a look at your life expectancy and anticipated health issues to determine whether you should buy long-term-care insurance. Our increasing life span as a nation means more of us will experience health conditions requiring long-term care, such as a stay in a nursing home. Long-term-care insurance may keep those costs from devastating your savings.

Focus Early on Your Nest Egg

With more Americans living longer than ever, it can be worth your while to make sure you have a nest egg that will support you for multiple decades after retirement. You do not want to wait till you retire to take a look at your savings. Instead, start saving as early as possible in your career, and if possible, consult with a financial advisor to get a professional’s perspective on your progress. Then if you are lucky enough to live to 100, you will have a better chance of enjoying your centenarian status with financial ease.