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How Long Are You Going to Live In Retirement?


Imagine trying to plan a vacation without knowing:


   (a) when you’re leaving or

   (b) how long you’ll be gone.

Talk about frustrating! Are you thinking about traveling this month? Or a year from now? Are we talking about a no-frills, weekend trip to a nearby city? Or an exotic, six-month, tour around the world?

Without a few important details, it’s impossible to plan or budget.

Planning for longevity in retirement.

It’s the same when you think about retirement. You can’t make a plan–much less any real progress–until you begin to wrestle with questions like:

  • How long a retirement do you anticipate?
  • How long before you retire? 

Why don’t we do some quick planning now?

Here’s a short exercise we do with our clients to get them thinking about the “next chapter” of life. 

All you need is a pen and a piece of paper.

First, let’s think about your life expectancy. 

I know, I know. Nobody’s guaranteed anything. Accidents happen and diseases abound. I could drop dead while typing this sentence, and you might live to the ripe old age 110. 

God only knows how long we’ve got. So, in one sense, we’re just speculating, making educated guesses. But to do this exercise, we need some figures to work with.

Currently, the average life expectancy in the United States is about 77 years (80 for women; 74.5 for men). 

What is typical for your family? 

Start with that number. Then consider your genetic makeup. If you’ve got grandparents and/or parents who lived into their late 80s or 90s, you can probably add some years to that average figure. 

On the other hand, if you’ve got serious medical issues in your family tree, or personal health conditions, take that into account.

Don’t agonize over this. Simply put down a number. How long might you reasonably expect to live? I don’t care what you put, if you want to live to be 103, great!

Write that down. (If it helps ease your mind, remember that you don’t have to share this with anyone.)

What age do you plan to retire? 

Now, underneath that number, write down the age at which you plan to retire. Is 65 your target? Perhaps earlier, like, say,  60? Or is it 70? 

There’s no ideal or “right” number. Maybe you plan to be like some of our elected officials and work well into your 80s? Again, this is between you and your paper. No one else needs to know.

Now do a little bit of math. 

Now that you’ve got your two numbers, do a bit of math. 

Subtract your desired retirement age from the age you expect to live.

The result is the number of years you’ll have in retirement. 

Let’s say you’re fairly healthy. You think “I could see myself living to be 85.” And, since you like your job, your desire is to work until the age of 70. Great. Eighty-five minus 70 means you’ll have 15 years in that window of time we call “retirement.” 

Think of that: A decade and a half of not working. All your bills are paid. For 15 years, you’ll have regular monthly income but no heavy responsibilities.

It’s kind of like being a teenager–but with money! (I’m kidding–but it actually can be like that if you want it to be.)

Running out of money.

The catch is how can you avoid running out of money?

Or put another way, how will you manage that retirement income you’ll be getting, plus whatever money you’ve saved and invested? Remember, it has to last for 15 years (or 30 years, if you plan to retire at 60 and think you live till age 90).  

Maybe you have a government or company pension. Maybe you’ll be relying on Social Security benefits to cover your basic expenses.

Ideally, you’ll have additional income from an annuity, or Roth IRA you can use to pay for other things. Whatever the source, your retirement assets have to last for a considerable length of time. 

This means you’ve got to think about issues like: your withdrawal rate, how you’re protecting and/or investing your money over that long period of time.

There are tax considerations. And, of course, there’s the ever-present reality of inflation.

The reality of inflation.

Ah, yes. Inflation. Consider the rising cost of a simple first-class postage stamp. In 1978, we paid just 15 cents to mail a letter. Today the cost is 58 cents.

In 1978, you could buy a basic, new Toyota Corolla for less than $2,000. In 2021, a stripped-down Corolla has a sticker price of almost $20,000.

A gallon of gas for that new Toyota cost 63 cents in 1978. In late 2021, it’s $3.39.

This kind of inflation has affected the price of everything. And there’s no reason or indication to suggest inflation won’t continue to take place during your retirement years.

Fortunately, retirees with pensions have some inflation protection built into their pensions. Those cost-of-living adjustments (COLAs) are a godsend for people on a fixed income. 

Social Security also includes cost-of-living increases. (However, most people correctly note that any Social Security raises quickly get eaten up by the rising costs of Medicare.)

So it’s probably not wise to assume that any future Social Security increases will fully offset inflation. If anything, for most people, the gap between retirement income and retirement costs will continue to widen. 

This means you need to be prepared in retirement to dip into your other assets over time to cover the income/expense gap created by inflation.

Your long-term retirement plan.

So as you’re creating your long-term retirement plan, you’ve got to think about these issues. How will you use your assets to create an adequate, steady flow of income for as long as you live?

You’ll need to factor in any other looming changes in your future.

  • Will you be paying off a house in a few years?
  • If so, how will that shrink the gap?
  • What does the overall economy look like?
  • What are economists saying about inflation trends?

You need a plan that takes into account all these factors.

It’s a lot to think about. But that’s the kind of work we do at Christy Capital Management. 

We walk clients through a process just like this (though much more detailed). We ask good, hard questions about your goals and dreams. We look at your unique situation and your existing investments. Then we work with you to tailor a plan and strategy that will get you to the future you want.

One thing to do before you retire

For now, I encourage you to begin thinking about that dirty word budget. Take your pen and paper and begin playing with a retirement budget. What income will you have? What expenses do you anticipate? 

I get my clients to create a retirement budget long before they ever walk away from their jobs. I encourage them to try living by that budget for at least six months before their “last day at the office.”

It’s a great exercise. It helps them see if their planning is realistic. 

The ones who engage this process are able to transition easily into retirement. Instead of entering a murky, unknown future, they enjoy a clear, well-lit path.

Don’t be like so many who wait too long.

Begin the process now. Call us at (877) 864-1145.

Let us help you move into the next chapter of life with peace and confidence. 

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