Living a long, healthy life is something most of us hope for. But from a retirement planning perspective, longevity comes with an important financial question: What happens if retirement lasts 30 years or more?
Someone who retires at 65 could potentially need enough income and savings to support themselves through their 90s and beyond. That means retirement planning is no longer simply about having enough money to stop working. It is about creating a strategy designed to provide income for decades.
Your Savings Have to Last Longer
A longer retirement means more years of housing, food, transportation, travel, hobbies, insurance, and everyday expenses. Even if your spending changes as you age, inflation can significantly increase the cost of goods and services over several decades.
Healthcare is another major consideration. Medical expenses can become a larger part of a household budget later in life, particularly if you eventually need assistance with daily activities or long-term care.
Social Security Decisions Matter
When you claim Social Security can have a lasting impact on your retirement income. You can generally begin receiving retirement benefits at 62, but claiming before full retirement age results in a reduced benefit. Waiting beyond full retirement age can increase your monthly benefit until age 70.
For someone planning for a potentially lengthy retirement, this decision deserves careful consideration rather than being based solely on when you would like to stop working.
Build a Plan for the Long Run
A retirement plan designed for longevity should consider how your income, investments, taxes, healthcare expenses, and spending needs may change over time. It should also account for unexpected circumstances, such as market downturns, major medical expenses, or the death of a spouse.
The goal isn't to predict exactly how long you will live. It is to avoid building a retirement plan that works beautifully for 15 or 20 years but becomes increasingly difficult if you live another decade or more.
Planning for a 30-year retirement may require a different strategy than planning for a shorter one. Contact us to discuss your specific concerns. A thoughtful financial plan can help you prepare for the possibility of living longer while still giving you the freedom to enjoy the retirement you worked so hard to achieve.