Experts think that any of us living today, who reaches age 65, healthy and vibrant, will easily make it to age 100. Whoa! That will change things financially, to say the least. In the “old days,” between 1960 and 1980, people who reached retirement age lived just four to eight years past retirement to about 69 for men, and 72 for women. It wasn’t too big of a stretch to have between five and 10 years of retirement income saved . But consider working 35 years, then retiring for 35 years instead of just 5 to 10. I read an article in 1983 that said by the year 2000, many people would be retired as long as they worked. At the time I balked at that idea — NO WAY! I thought. But the fact is, those numbers are a reality now and that longer retirement period is presenting some very challenging problems we all need to think about:
- How will you afford to live 35 years into retirement?
- Will you need to work more years than you had originally planned, until age 75, for instance? What if you can’t because of poor health?
- Will you have to reduce your living costs drastically to make ends meet?
- What about inflation? If the inflation rate keeps averaging 5 percent per year as it has been doing, living on a fixed income for 35 years is not going to work very well.
- People may be living longer, but especially in the United States, where the standard American diet is so poor, you won’t be living to
a ripe old age in good health. What if you’re one in four people who will require long-term care? This is expensive at between $2,500 and $6,000 per month.
- Social Security will be bankrupt in 2034, according to the Social Security Administration’s annual report, so what do you do if you can’t count on even that income in retirement?
- If you are one of the many retired persons who is divorced, what will you do to live on just one retirement income instead of two?
The old way of looking at retirement planning may not work for you anymore. Trying to save using a basic 401(k) is passe. It’s time to get creative and look at real estate, life insurance, annuities, and leasable resources as other options for creating a predictable retirement you can’t outlive. I suggest you read the book MONEY, What Financial Experts Will Never Tell You. Full of case stories and practical, holistic approaches to financial planning and retirement that are easy to apply, this book is a must-read. Get it in time for Christmas and give it to your kids as well. They will for sure be living longer than you, in most cases, and will have to be ready for a long retirement period. Why not prepare them for that now? Get going, as time will keep marching forward. Will you be pleasantly surprised when you reach retirement age, or will you be horrified and shocked at what you have done to yourself financially by not taking things seriously today?