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Layin’ It on the Line: Why retirement planning needs a longevity makeover

By Lyle Boss - Special to the Standard-Examiner | Feb 21, 2024

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Lyle Boss

Picture this: You’ve meticulously saved for decades, diligently squirreling away money for your golden years. You envision carefree days filled with travel, hobbies and leisurely naps. But there’s a hidden variable in this happy retirement equation: your own longevity. A recent study reveals a startling gap in understanding life expectancy, which directly impacts how much and how long you need to save. This article throws open the curtains on the crucial role of longevity in retirement planning and why simply focusing on savings risks leaves you financially exposed as the years tick by.

The longevity gamble

Imagine meticulously saving for retirement based on assumptions of a 75-year lifespan, only to live well into your 90s. This scenario, unfortunately, isn’t fiction for many. Advancements in health care and improved living standards have pushed average life expectancy upward, creating a “longevity risk” for unprepared retirees.

The problem lies in underestimating how long we might live. Many rely on personal anecdotes – family members’ lifespans – instead of considering broader statistics and medical progress. This overlooks the fact that today’s 65-year-olds have a considerably higher chance of reaching 90 compared to their grandparents. It’s like playing a game with incomplete information, potentially setting yourself up for a financial shortfall later in life.

The domino effect of longevity

Longevity’s impact extends far beyond mere savings figures. It directly affects decisions about Social Security, a vital income source for many retirees. Delaying benefits until age 70 maximizes the monthly payout, but most Americans claim them early, often at 62, receiving significantly less. This decision, usually driven by an inaccurate view of their lifespan, can lead to a financial squeeze in later years. Think of it as choosing a smaller slice of pie today, leaving you with a potentially shrinking portion the longer you live.

The equation gets even more complex when considering gender. Data shows women have a higher likelihood of living longer than men, requiring potentially more extended retirement periods. This necessitates personalized retirement plans that factor in individual circumstances like health, family history and lifestyle. Ignoring these variables is like planning a road trip without a map, potentially leading you down the wrong financial path.

Embracing longevity literacy

The key to navigating this “longevity gamble” lies in longevity literacy. This refers to understanding the factors influencing lifespan and using that knowledge to make informed financial decisions. Tools like online life expectancy calculators and consultations with financial advisors can be valuable resources. Imagine them as financial GPS systems guiding you toward a secure retirement destination.

Start today, secure tomorrow

Remember, retirement planning is a marathon, not a sprint. By factoring in longevity and taking control of your financial future today, you can ensure a comfortable and well-deserved retirement, regardless of how long it lasts. Start by educating yourself on longevity trends, exploring different retirement income options, and considering adjusting your savings goals based on your individual circumstances. Take proactive steps now, and watch your retirement dreams unfold into a beautiful reality, even if they stretch well into your 90s.

Lyle Boss, a native Utahn, is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management. Boss Financial, 955 Chambers St., Suite 250, Ogden, UT 84403. Telephone: 801-475-9400.


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