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July 3, 2020
Chances are you’ll live longer than your parents, and much longer than your parents’ parents lived. While that sounds like a gift at face value, a longer life expectancy brings with it some special concerns, too.
According to the Society of Actuaries, an actuary professional organization in Illinois, one of out three males and one out of two females who are in their mid-50s today will live to be 90. This reveals a measurable shift toward an increased life expectancy for both men and women.
Are you prepared to live longer than you’d expected? Here is some advice that can help.
Some people save and pinch pennies for years, and they have a nice, healthy savings account at retirement that they can live on. In combination with their Social Security payments, this can help support your lifestyle as you enjoy the years ahead. But Social Security can only provide so much monthly income. And your life savings might not last as long as you’d hoped.
However, a steady stream of income could give you the security that you need. It can act as insurance against running out of money just when you need it the most. Depending on your situation, a deferred-income annuity might be the answer.
Some annuities give the purchaser a lump sum at retirement. And some retirees prefer it that way. But with the right deferred-income annuity, you would receive a steady monthly income that will not run out during your lifetime.
You can apply for Social Security benefits as early as age 62, according to the Social Security Administration (SSA). But that’s with a pretty hefty penalty, taken as a reduction in benefits, because the SSA considers this early retirement. Full retirement age is 66; at this age, there isn’t any penalty. However, there is one other possibility.
If you postpone retirement until age 70, you’ll receive delayed retirement credits. So, you could receive your full retirement benefits (plus more). Delaying retirement has other benefits, too. The longer you work, the more you’ll be able to save and invest, which can give you even more of a cushion.
Whether you want a lump sum to watch over–or you prefer a lifestream of income–chances are you’re going to need more than you realized back when you were in your 20s or 30s.
Remember that living longer might mean you’ll need more expensive medical care at some point. While you’re saving and determining how much income you’ll need later, factor in the possibility of long-term care, which Medicare might not cover.
A longer life expectancy could be both a blessing and a curse, but it doesn’t have to be. If you plan well, and far enough in advance, you can look forward to more birthdays without fretting about how you’ll get by.
The NewRetirement Retirement Calculator can help you estimate your own life expectancy and tell you whether or not you are currently on track to being able to afford your own longevity or not.
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