How to Prepare for a Longer Retirement

When it comes to investing, the notion that it has to be expensive, confusing, or complicated is often a misconception. The foundation of successful investing lies in understanding the basics in a clear and straightforward manner.

Many people fixate on their retirement age without considering one incredibly important factor—how long they will actually need to rely on their retirement savings. This oversight can have significant implications given the potential for increased longevity beyond statistical averages.

According to the Social Security Administration, a 65-year-old today can expect to live between 19 to 21 and a half more years. However, there’s a considerable likelihood of surpassing these estimates, with nearly one-third of 65-year-olds living up to age 90 and a surprising one in seven surpassing age 95. Consequently, retirees should be prepared with a strategy that may span 30 years or more.

One straightforward solution is extending your working years. By deferring retirement and working for a few additional years, you can reap various benefits, with a notable increase in Social Security benefits being one of the key advantages. For instance, prolonging retirement by just one year at age 66 can enhance Social Security income by 8%. Similarly, working an extra eight years from age 62 can boost retirement income by 40% or more.

Beyond the financial gains, working longer offers a lot of social and health benefits. Remaining engaged in work as you age can combat social isolation, a risk factor for declining mental and physical health. What’s more, research shows that working past age 65 can enhance your lifespan while contributing to overall well-being and life satisfaction.

Delaying Social Security benefits and exploring options like deferred annuities are other avenues to secure retirement income effectively. However, proceed with caution when considering annuities. They can be complex and have hidden fees. Additionally, factors like inflation, rising healthcare costs, and Medicare considerations should all be factored into a comprehensive retirement plan.

Planning for retirement should encompass a holistic approach that considers longevity, financial security, and quality of life. Starting the planning process well in advance is important to ensure a smooth transition into this new phase of life.

Listen to Retirement for Real’s Full Episode, “How to Prepare for a Longer Retirement,” Below!

Retirement for Real with Lena Armuth

Retirement for Real is an investment podcast helping retirees make sensible financial decisions in retirement. Lena Armuth, a former first-grade teacher and current fee-only financial advisor, is your host. Join her to learn all about investing for and in retirement. Nothing fancy. No overly complicated or complex solutions. Just the fundamentals explained in a way that is simple to comprehend.