Thanks to advances in medicine and health care technology, people are living longer than ever. According to the Centers for Disease Control and Prevention, the number of people in the United States who are age 100 or older is at a record high.1 Additionally, Pew Research Center found that the number of centenarians globally could grow eightfold by 2050.2
Most of us hope to live a long, happy life. However, a long retirement can put a strain on your finances. It’s possible your retirement could last 40 years or more. There are ways you might be able to manage this risk and ensure you have enough assets for the long haul. Below are a few steps you can take to prepare for an extra-long retirement:
Don’t be too risk-averse.
It makes sense to want to limit your investment losses in retirement. After all, a downturn in the market might hinder your ability to take withdrawals and support your lifestyle. With that in mind, you still need to grow your savings so you can fight inflation and make your savings last. If you’re too conservative, you may not get the growth you need to meet your goals.
You might want to consider working with a financial professional, who can help you develop a strategy and identify tools that balance risk protection with growth potential. For instance, a financial professional may recommend an annuity. These policies often offer growth potential as well as downside protection.
Create guaranteed* income streams.
For most retirees, the only sources of income that are guaranteed are Social Security and maybe a pension. While these are good sources of income, you might want to consider finding other vehicles that can ensure you will have steady cash flow for the rest of your life, no matter how long you live.
For instance, certain types of annuities will offer you a guaranteed stream of income for life. The amount you will receive depends on your specific policy. If an annuity is something you think could be right for you, then you might want to talk with a financial professional. A professional can help you decide which policies, if any, are right for you and your retirement.
Determine when you should start taking Social Security.
Just because you become eligible for Social Security doesn’t mean you have to start taking your benefits right away. You don’t even need to receive your benefits when you reach full retirement age (FRA). It’s possible to delay your Social Security benefits until the age of 70.
There are benefits to delaying. For each year past your FRA that you delay filing, you’ll receive an 8 percent increase on your benefits.3 That means if, for example, your FRA is 66 and you delay taking Social Security until age 70, you get 32 percent more income, or 8 percent for each of the four years you delayed. This boost in income can be extremely useful and go a long way toward making sure you have enough to make your retirement last for 40 years or more.
Ready to plan for a long, happy retirement? Let’s talk about it. Contact us at Grand Canyon Planning Associates. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.