Do you know what the current, average life expectancy is for American men? How about for American women? These figures change every year or two, and according to the most recent Society of Actuaries data, the average 65-year-old man is anticipated to live almost to 87—up from 84.6 in the year 2000. The life expectancy of the average 65-year-old woman is also up—88.8, where it was 86.4 in 2000.
The happy news in all of this: People are living longer. Both men and women can now expect to live, on average, an additional couple of years, compared to just 14 years ago.
Encouraging though this may be, it does complicate things, at least as far as your retirement planning goes. Individuals now need to plan for a retirement of close to 22 years, as opposed to an average of just 19.6 years. That may seem like a negligible increase, but for the average household it adds up to a minimum of $100,000 in additional savings—not exactly small change.
But what does all of this mean for you? What are the lessons we can take away from this?
First and foremost, this is a great reminder of the need to revisit your retirement plan periodically. Hopefully, you are doing this every year, at a minimum, with your financial advisor. Things change with the markets, with your own lifestyle and goals—and yes, even with life expectancies.
To state an obvious point: Savings are important. The last thing anyone wants is to outlive their retirement savings, but now that goal has become harder than ever to meet. Individuals now need to anticipate more savings than ever before, which underscores the importance of starting as early and saving as much as possible.
For many, this news will also underscore the importance of holding off on Social Security claims. This is not true across-the-board, but certainly longer lives lend credence to the idea that waiting until 70 is advantageous.
Finally, and critically: The message here is not that you will definitely live to be a certain age, but rather that you simply don’t know how long your life—or your retirement—will be. Retirement planning is not about planning for one specific outcome, then, but rather about planning for all contingencies.
For financial planning that takes all possibilities into consideration, please don’t hesitate to contact the Stonepath Wealth Management team today.