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Ok ... I'm in my '40s, have been planning for retirement and I'm confused. For my retirement plans, I've been assuming a max life expectancy of 85.
But some of these retirement age calculators are projecting average life expectancy of 90-95 in the next 20 years due to additional medical advances, etc.
Well ... that makes a BIG difference in how much I need to save and and how long I need work so I won't run out of money.
How do you plan for this?
Also ... I was just curious for those who have already retired. Is it worth it living on less just so you don't have to work anymore? Or ...
Would it have been better to work longer and save more so you would have more money to enjoy retirement?
Life expectancy is a guess. Are you male or female? The average for women is 6-8 years longer than for men. The guess is that life expectancy will continue to rise but those estimates are not taking into account the current epidemic of obesity and diabetes. Do you have any major health risk factors in your family? Do you smoke? Deduct 10 years if you do. At what age did your near relatives live to? If they died early, then the lower age is a more reasonable expectation, but if they smoked and you don't, add 10 years to your expectation.
For me, I have long lived relatives (thanks mom!), never smoked, and have good health so I'm planning for possibly living to 100 or more (it could happen). It is a good idea to estimate your lifespan on the long side so you don't find yourself at 90 and destitute. The odds are very good for me that I will live long past 85 as nearly all my direct relatives have. That might not be a good guess for you.
My calculations are for me to have a comfortable existence with a safety net of unneeded funds just in case. What amount of money that will take is also a personal thing. If you need a Lear jet to be comfortable, then you will need a whole lot more money than I will.
As a woman there is no need to plan for longer life expectancy just get married and when your husband has accumulated what you think you need, move to Minnesota and divorce him. You'll get half of his pension money without even lifting a finger
You have to consider your health, your genes (family history), interests, current financial status, potential issues of medical insurance.
We have plotted and planned and saved for our 35 year working life to be able to retire at 55 and have 35+ years to enjoy. We are still young enough to still do the adventure travel we did years ago and not ready for the golf course yet.
There is no magic number or magic date. Just plan set some goals and work towards them.
Remember balance in all things. Do not postpone all your "fun" activities until you retire because you may be too ill to enjoy them. Saving is a bit about balance also. Spend some and save some for a rainy day as the saying goes.
No matter how much effort you put into the plan there is a very good chance things will change. Planning on a life expectancy of 85 is not unreasonable especially if that is in line with your family history. I worked every detail of my plan and now just four years into retirement I have found adjustments I will have to make, but nothing that cannot be accommodated. Don't be overly concerned with things you cannot predict.
As a woman there is no need to plan for longer life expectancy just get married and when your husband has accumulated what you think you need, move to Minnesota and divorce him. You'll get half of his pension money without even lifting a finger
I hope this isn't the voice of experience talking...........
Quote:
Originally Posted by sweetana3
You have to consider your health, your genes (family history), interests, current financial status, potential issues of medical insurance.
We have plotted and planned and saved for our 35 year working life to be able to retire at 55 and have 35+ years to enjoy. We are still young enough to still do the adventure travel we did years ago and not ready for the golf course yet.
There is no magic number or magic date. Just plan set some goals and work towards them.
Remember balance in all things. Do not postpone all your "fun" activities until you retire because you may be too ill to enjoy them. Saving is a bit about balance also. Spend some and save some for a rainy day as the saying goes.
I agree with Tesaje and Sweetana3. The most important aspect of retirement planning is "quality of life" both NOW and when you retire.
The same prime factors that determine life expectancy will determine if you will be healthy enough to enjoy retirement whenever it comes. Balance your diet. Don't smoke. Alcohol in moderation. A consistent exercise program. Stress management in both your job and personal life. I'm not trying to preach to you, but rather am giving you my experience. I screwed up most of these things, and retirement isn't much fun when you aren't healthy.
From a purely financial perspective I would add one thing. Consider long-term care insurance. On a positive note, if you are mature enough to be asking these questions now, and you have the discipline to implement healthy changes, you probably stand a great chance of both living to 95 AND enjoying it.
I am planning on 90 just so I don't wind up eating catfood. My mother's side of the familiy lives into their 90s and my father's side makes it to early 50s, so its anyones guess. I can promise you, though, that if I expect to take after dad (in which case I might go any day now)and I start spending my savings I will wind up taking after mom's side and I will be living under a bridge for the next 40 years.
The key to enjoying retirement is to not worry where the next buck is coming from.
I started at 35 to work on saving for my retirement,every raise,bonuses I got went into my 401K fund.
The key here is if you don't get it,you will not miss it so you continue on with with what you have.
I put 3 kids through college in the 70's,I retired in 92 with a final yearly salary of $56,000.
For some reasons todays people do not understand that word "savings",they are too busy working their asses off to give little "johnny" everything they didn't have and THAT is the dumbest excuse Ive ever heard.
...
Well ... that makes a BIG difference in how much I need to save and and how long I need work so I won't run out of money.
How do you plan for this?
You are making an assumption that your portfolio will be shrinking during your retirement.
Bot everyone does that.
I cashed out some of our portfolio, to have cash with which to buy a farm to retire onto.
We live on it now with no mortgage, no debt, and our portfolio is re-building even as we speak.
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