The rise and importance of longevity planning

The U.S. population is getting older. In fact, by 2024, our country will hit Peak 65 – the greatest surge of Americans turning 65 in our country’s history. And, with the number of centenarians rapidly rising – the group has already expanded 44% since 2000 and is projected to increase six times over the next 40 years – people are starting to consider how to plan better for living longer.

While there are many factors at play – including genetics, lifestyle choices and access to healthcare – longevity is something we should be financially planning for and prioritize. This relatively new and more holistic approach to retirement preparation can provide you with the support you need to take advantage of opportunities, cope with challenges and plan for the unexpected in retirement.

Strategic longevity planning can also help you budget for late-in-life expenses and ensure that every aspect of your wealth picture is understood and incorporated into your long-term plan.

Here are five important steps you can take now to help ensure you won’t outlive your life savings later.

  • Envision what you want your retirement to look like: Imagine how you would ideally like to live in your later years. To start, ask yourself some core life-planning questions such as, ‘What do you want out of life, what gives you joy and how do you plan to pay for it?’ Identifying what brings you purpose, joy and meaning will help you set goals, plan and manage your finances and make the most of your retirement years, which current trends indicate could last three decades or more.
  • Save, save, save: Living a long life requires a solid nest egg and the ability to withstand any number of financial and other shocks. Online calculators can help you estimate your retirement income and tweak your portfolio to adjust risk and/or improve returns.
  • Invest in a lifetime annuity: An income annuity is a cost-effective way to guarantee income for life and combat longevity risk. It can help supplement other sources of guaranteed income such as Social Security and can be especially valuable if you don’t have a pension. Annuities can also help to protect you against the risks of stock market volatility. Your payouts will continue no matter what happens in the markets – or how long you live.
  • Consider an integrated profile: A blended financial portfolio that includes annuities can result in a higher income level throughout retirement and a greater amount of legacy assets available to beneficiaries than an investment-only asset allocation approach. By diversifying your assets, you can invest in other funds more aggressively knowing a portion of your income is always safe and secure.
  • Remember, one size does not fit all: Longevity planning is a very individualized process and there is no one financial savings tool or strategy that will meet everyone’s needs. Engaging an experienced and skilled financial professional can help you establish a plan and get your financial affairs in order so that you can live the life you want in retirement.

For more Social Security planning help, tune in to the Your Money Map conversation with Jean Chatzky, featuring Nora Super, executive director of the Milken Institute, on Wednesday, April 21, on the Alliance for Lifetime Income Facebook page.

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