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Longevity: How to Plan for the Unpredictable

Filed under: Retirement, Life Events

Planning can resolve many retirement concerns. With a detailed and focused plan, you can predict how much income you will need in retirement, how much you need to save every year to retire comfortably, and even what allocations will help you best manage risk.

One of the biggest variables in retirement planning, however, is also one of the most unpredictable. It’s longevity, or how long you may live after you retire.

Most retirees want to live a long, happy life. However, a longer life in retirement also means more years of retirement to fund. That means you’ll need more money to maintain your standard of living.

Generally speaking, retirees are living longer. According to the Society of Actuaries, one-third of all men in their mid-50s and one-half of all women in the same age group will live to age 90. For couples age 65, there is a 50 percent chance that one of them will reach age 92.1

Although the population may be living longer, that finding doesn’t help you predict how long you will live. While genetics plays a role, there are also other factors, including personal choices, access to medical care, education and even sheer luck.

How can you plan for retirement when one of the biggest planning variables is so hard to predict? Fortunately, you don’t need a crystal ball to plan for a long retirement. There are steps you can take today to improve the odds that you’ll be financially stable even in the latest years of your life.


Create a long-term care funding plan.

According to the U.S. Department of Health and Human Services, a 65-year-old today faces a 70 percent probability of needing long-term care at some point in their life. That care is likely to last for several years and may cost a substantial amount of money.2

Long-term care costs could drain your retirement assets. If you’re married, you may spend down your assets to pay for your care. Then, when you pass away, your spouse could be left with a pile of medical bills and few resources to pay them.

Take some time to develop a long-term care strategy. Consider long-term care insurance, which can cover a wide range of services, both in a facility and at home. Talk to your kids and other loved ones about how they may be able to contribute. Also, research government resources that may be able to provide assistance.


Optimize your Social Security.

You’ve paid into Social Security for decades, so it’s understandable that you may want your benefits as soon as possible. However, you can actually give yourself a permanent lifetime raise by waiting.

Most retirees reach their full retirement age (FRA) sometime between their 66th and 67th birthdays. That’s the age at which you can file for benefits without seeing a reduction. However, if you can delay past your FRA, you get a permanent 8 percent increase for every year that you wait. For example, if your FRA is 66 and you file at age 70, you would get a permanent 32 percent increase in Social Security benefits. That could help you fund a long-term retirement.


Create guaranteed streams of income.

One of the challenges in retirement is deciding upon a reasonable withdrawal rate from your 401(k), IRA or other retirement assets. The more you withdraw, the faster your accounts may deplete. That could be problematic if you live longer than expected.

You can minimize this risk by converting some of your savings into guaranteed streams of lifetime income. For example, annuities offer a variety of ways to generate a guaranteed stream of income from your retirement assets. In some instances, you can also still maintain growth potential. Guaranteed income can help you manage the longevity risk.

Ready to develop your longevity plan? Contact us at Ambrose Financial & Insurance Services. We can’t predict how long you will live, but we can help you develop and implement prudent strategies. Let’s start the conversation today.





CA Insurance License No. 0F95178

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16112 – 2016/9/20