Nobody likes to think too much about how much time they have left to live, but studies show it’s likely you’ll be around for quite a while after you retire. The current life expectancy in the U.S. is 76.1 years.1
The big question is, will you be able to support yourself in a way that lets you get the most out of all those golden years rather than ending up with “stressful” years instead?
While it’s good news that you’re probably going to live longer than you may have thought, it comes with a caution. Along with the possibility of living as many as two to three decades in retirement, there comes the burden of knowing it’s up to you to make certain you’ll be financially covered for the duration.
What will it take to ensure you don’t outlive your money?
It’s estimated that a retired couple with annual living expenses of $75,000 today (before taking into account income taxes) would need approximately $157,000 annually to maintain that same lifestyle in 25 years, due to inflation.2
Also, health care costs in retirement are continuing to climb. It is anticipated that a 65-year-old couple retiring this year can expect an average of $315,000 in health care costs throughout retirement.3
So how can you be ready financially no matter how long you live? Here are three ideas that may help you to prepare for a long and financially secure life in retirement.
ONE – Invest for the long haul:
Is it growth of your balance or principal protection you want? How can you handle the “ups” and “downs” of the stock market? Can you sleep at night if you are living with those fluctuations? Take stock of your feelings, but remember your choices are based on your tolerance.
While it may be appropriate to move to a more conservative portfolio as you approach and enter retirement, it’s also vital to select a mix of investments likely to keep pace with inflation. Investments such as bonds, money market funds, and bank savings accounts, while generally considered safer places to put your money, may not provide enough growth to keep up with inflation. Consider incorporating stocks and other investment types, selected with your tolerance for volatility of your account balance in mind, to add that necessary level of growth potential to your investments.
TWO – Be careful about withdrawals:
The amount you regularly withdraw from your savings can have a big impact on your future. If you withdraw too much before retirement or over many years of retirement, you could be at risk of outliving your savings. An old “rule of thumb” suggests that a withdrawal rate of 3 to 4 percent from your savings, once you are in retirement, is generally considered prudent for the long term, but you should speak to your financial professional about what might be the right withdrawal rate for your circumstances.
THREE – Stay on top of your money:
Continually monitor your savings to assess if you have saved enough to meet your needs, both before and after you retire.
There’s every reason to feel good about having more years in retirement but having the means to continue to support yourself as you age is critical to being able to enjoy those years. Reach out to your financial advisor and your retirement plan representative to get help planning for a long, secure, and happy retirement.
Getting Your Firm Started
Are you the owner of a small firm wanting to add retirement planning to the list of benefits you offer to your employees? Visit www.abaretirement.com/programadvantage for more information or contact us at [email protected] for a free consultation.
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This information is provided for your education only; it is not intended as investment advice. Please consult a financial professional before making an investment or insurance decision.
All investing involves risk, including the loss of principal. When redeemed, an investment may be worth more or less than the original amount invested. Diversification does not ensure a profit nor protect against loss in a declining market.
1 https://www.cdc.gov/nchs/fastats/life-expectancy.htm
IMPORTANT: The illustrations or other information generated by the calculators are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. This information does not serve, either directly or indirectly, as legal, financial or tax advice and you should always consult a qualified professional legal, financial and/or tax advisor when making decisions related to your individual tax situation.
3 Health Care in Retirement Will Cost an Average of $315,000 | PLANSPONSOR https://www.plansponsor.com/health-care-retirement-will-cost-average-315000/?utm_source=newsletter&utm_medium=email&utm_campaign=Newsdash&oly_enc_id=3247B6803912D6W
Please read the Program Annual Disclosure Document (April 2023) carefully before investing. This Disclosure Document contains important information about the Program and investment options. To find the full Annual Disclosure Document online log into your account on the Program website at www.abaretirement.com and go to the Fund Information section. For email inquiries, contact us at: [email protected].
Registered Representative of Voya Financial Partners, LLC (member SIPC).
Voya Financial Partners is a member of the Voya® family of companies. Voya and the ABA Retirement Funds are separate, unaffiliated entities, and not responsible for one another’s products and services.
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