Average life expectancies have been steadily increasing due to advances in healthcare. While that’s good news, it can make retirement planning tricky. To save enough, you need to know approximately how many years your money will have to last. Many people underestimate how long they’ll live and, as a result, they don’t adequately prepare for retirement.
How Long Can You Expect to Live After You Retire?
When people think about how long they’ll live, they often think about the ages that their parents or grandparents reached. Those aren’t reliable guidelines. Due to advances in medical care, people who are adults now can be expected to live longer than previous generations of their families.
The Social Security Administration produces mortality tables with information on how long a 65-year-old person is likely to live. An average 65-year-old man can expect to reach the age of 85, while an average 65-year-old woman can expect to live to 88. Some individuals, particularly those who exercise, eat healthy food and don’t smoke, might live significantly longer.
What Will You Have to Pay for in Retirement?
When you’re retired, you’ll need enough money to cover housing, food, transportation, and other essentials. Even if your house is paid off, you’ll still have to cover maintenance, repairs and taxes.
As you get older, you might need medication or other treatments to manage chronic health problems, and you might be hospitalized one or more times due to illness or injuries. You might eventually have to move into an assisted living facility or a nursing home. Those are realistic scenarios, yet many people don’t plan for them or erroneously assume that Medicare will cover all their bills for medical treatment and long-term care.
When Should You Start Collecting Social Security?
Claiming Social Security benefits too early can cause retirees to struggle financially. Waiting as long as possible to collect Social Security can pay off in the long run.People can choose to claim benefits at the age of 62 or wait until they reach 70. People who tap into Social Security at a younger age receive smaller monthly payments and might not have enough in savings to make ends meet. Those who wait to begin collecting Social Security receives more money each month.
How Can You Prepare for a Secure Retirement?
A financial advisor can help you create a retirement planning strategy that’s tailored to your circumstances and goals. You can discuss things like how long your money will have to last, which type of retirement account best fits your needs, how much you should contribute each month and when to claim Social Security benefits.
