5 Steps That Help You Avoid Living Longer Than Your Money

Growing old is a privilege, but to do so in prosperity requires some forward planning. Without proper retirement planning you could fall prey to what financial planners call “longevity risk” — outliving your retirement fund.

This means more than just sorting out your contributions to an pension but making a full plan for retiring in style, with enough funds to let you live in comfort for as long as you can expect to live.

Here are a few tips to help you stay prosperous long into old age.

Step No. 1: Claim Social Security later

One of the most significant steps that most people can take is a simple one. Just wait longer to retire.

The “Spend Safely in Retirement” plan suggests waiting until age 70 to claim Social Security, then using the IRS required minimum distribution table to determine how much you can sustainably withdraw from savings each year.

Steve Vernon, a research scholar at the nonprofit Stanford Center on Longevity in Stanford, Calif., worked on a study of nearly 300 different retirement income approaches and found that this strategy was the best way for middle-income people with $100,000 to $1 million saved to create an income stream.

Step No. 2: Account for inflation

According to the Allianz Life Insurance Company, 64% of Americans don’t have a financial plan that addresses the rising cost of living in retirement. Inflation is likely to gradually erode your nest egg, and that can pose a serious threat to your prosperity in retirement.

By developing a plan to address inflation, you can help prevent a squeeze to your retirement lifestyle. One way is to makes your investments remain in at least some stocks, which generally grow faster than inflation.

Step No. 3: Account for rising medical costs

One of the aspects of inflation that is most applicable to retirees is medical inflation. Recent statistics indicate that U.S. healthcare costs are projected to outpace inflation in the broad economy, which it has done in the past as well.

Cost increases for personal health expenditures are projected to rise by 2.2% annually, vs. 1.9% for inflation, which makes it all the more important to adequately plan for expenses related to healthcare.

Step No. 4: Account for changing interest rates

Depending on your allocation, rising or falling interest rates can result changes to your investments that could increase or decrease your overall risks.

If you have not already retired, changing rates could mean you need to set aside more and more of your money each month just to keep your retirement plan on track. Or, you can cushion the impact of by investing in products that offset the changes in interest return.

Step No. 5: Estimate your life expectancy

Ultimately, how much money you need depends on how long you are likely to live. However, while life expectancy represents the number of years on average someone of a given age is expected to live, you could still be around for much longer than that.

Some tools, like the Actuaries Longevity Illustrator, allow you to plug age and health information in to get an idea of the probabilities behind you living to a certain age. This can be very useful for planning to longer horizons.

Small-cap winners galore

The big stock market winners share one common attribute: Near the beginning of the ascent of their shares, the companies offer revolutionary products or services, are market leaders in their respective industries, or both. Some big stock market winners that possessed the attributes outlined above are Netflix (NFLX), which we recommended to investors in October 2002; Intuitive Surgical (ISRG), which we bought and recommended in July 2004; Baidu.com (BIDU), which we bought and recommended in August 2006; and MercadoLibre (MELI), which we recommended to investors in October 2010. Get up-to-date small-cap stock picks from David Frazier, editor of Small-Cap Profit Confidential.
Click here

Smarter cryptocurrency investments

The stock market crash of 2008 was the catalyst for his journey into alternatives. And interestingly, it was the impetus behind the creation of Bitcoin and the blockchain technology behind it. Keene Little wasn’t ready to risk his money yet but he was very curious, so he began charting Bitcoin’s technical patterns. What finally convinced him to dip a toe into digital currencies was seeing that they followed familiar price patterns that could be analyzed and successfully acted on. Now he shares those insights with subscribers to the Crypto Wealth Protocol.
Learn more