How Long Will You Live?
Warning: Your Retirement May Last Longer Than You Expect
Courtesy Lee Johnson Capital Management, CLU, CFP, ChFC, LIVING WELL Magazine
The most important retirement income question is one that no one can answer: How long can you realistically expect to live after you retire? Will that be for 20 years? For 30 or 40?
With advances in medicine and other factors, a financial strategy that projects out to age 85 or 90 may not be adequate, as more than one-third of couples retiring at age 65 will have one spouse live to age 95, and 15% will have one spouse live to age 100! (* “Longevity Risk Quantification and Management: A Review of Relevant Literature,” Ernst & Young LLP, November 2008).
So if you don’t know how long you will live, wouldn’t it be a good idea to focus on the question: “how long will your money last based on your beliefs about what your rates of return could be?”
For some people it makes sense to focus initially on a fixed income obligation that will pay a guaranteed income stream for the first 10 to 12 years.
If you have an income stream that you can depend on for 10 years, then the rest of your savings could be put toward growth and let it stay there until you’ve hit a predetermined amount of money,” says Lee.
Remember the objective is to try to make the money last as long as you do.
When you think about it, we’re all challenged with the goal of trying to replace our paycheck after retirement.
It sounds self serving, but before you make critical decisions about retirement we would recommend you employ a Certified Financial Planner. You get to live through retirement one time (and a number of the decisions are irreversible). Most retirement planners have helped people retire over the years hundreds of times so they can help you avoid making the really bad decisions.
Here’s hoping you live a retirement with confidence.
Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Lee Johnson Capital Management, LLC (LJCM). LJCM is an independent Registered Investment Advisor and is not affiliated with Triad Advisors.