How Living Longer May Affect Your Retirement Plan

Reaching your targeted retirement age is no small accomplishment. Now is the time to sit back and reap the benefits of all the hard work and sacrifice it took to get here. But for many, a dark cloud hangs over what is supposed to be a carefree time; will I outlive my money? 

Retirement planning needs to contemplate a long lifespan

Everyone’s different, and circumstances are unique, but the table below gives a sense of how many years of income to plan for if you want to be 50% or 90% confident you will not outlive your money. Accordingly, a 65 year old man should plan for 16 years of income, at which time there’s a 50% chance he’ll still be alive and need more money. If he plans for 28 years of income, there’s only a 10% chance he’ll then be alive.

Source: Allan Gray, ASSA, SA Annuitant Standard Mortality Tables 1996-2000

Other considerations of retirement security

Increased longevity not only means the expense of daily maintenance but also the costs of filling more time with travel, for example, and the greater likelihood that medical issues will arise. And although inflation has not been a concern in recent years, there is always a risk the rising cost of living will erode retirement funds. These factors mean it is likely some adjustment of investing strategies, from what may have been a norm not too long ago, is in order.

Fiduciary financial advisors act in your best interest to achieve your financial goals

Traditional retirement rules, such as significant holdings in bonds and cash and pulling no more than 4% out of a fund’s principal each year, may not work. Financial advisor’s must be more nimble and possibly look at recommending investment portfolios that have up to 50% or more in growth assets to generate the necessary real returns.

Spinnaker Investment Group is dedicated to making your financial goals and dreams a reality in whatever economic climate exists.


The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the securities mentioned. The information contained herein, while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions expressed herein are subject to change without notice.

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