Retirees are living longer
Today more people are living longer — and the likelihood of living even longer increases for those who make it to retirement age.
Here’s a look at how longevity plays a factor in retirement spending. So, when your golden years arrive, you can be prepared to confidently move forward with your life.
For example, a healthy 65-year-old man in the U.S. can expect to live another 17 years, on average. And a 65-year-old woman can expect to live another 19.8 years.1
Women, on average, are outliving men: According to the CDC, women’s life expectancy is 79 years and men’s life expectancy is 73 years.2
Those who are part of a married couple tend to live two years longer than their counterparts who aren’t married.3
With the possibility of living for many years, perhaps decades, after you retire, there’s a lot to consider.
Leading up to their retirement, you might worry:
- Will my savings be enough?
- How long will it last?
- How much should I plan to spend on health care?
- Should I leave money for my kids or spend it while I’m here?
In fact, 68 percent of Americans worry they might not have enough money for retirement.4 (It shouldn’t be surprising given the fact that one survey reports that 27% of people who are 59 or older don’t have any retirement savings.5
Stay healthy in retirement
Let’s face it: the older you get, the more likely it is you’ll need to pay more for health care. With rising health care costs, it can be nerve-racking to think about.
And some have had to come face-to-face with it earlier than expected: health problems and caring for elderly loved ones are common reasons why people retire earlier than planned. Also, some retire early due to stressors caused by stressful or traumatic events earlier in their life.6
Stats like these are likely to raise your blood pressure. In fact, 64% of American workers are so concerned about paying for health care in retirement that it’s causing them to feel financially insecure about the future.7
Supplement your Medicare coverage
And it’s not hard to see why. Today an average 65-year-old couple will spend in the ballpark of $315,000 to cover health costs during their retirement years.8
To offset health care costs, consider putting money into a health savings account (HSA) if you are enrolled in a high-deductible healthcare plan, which has several tax benefits. In 2023, an individual can contribute up to $3,850, and a family can put away $7,750. Over 55 years old? You can add an extra $1,000 to the pot each year.
Long-term care options
A major health event could require long-term care services. In fact, today nearly 70% of retirees will need these services at some point in their lives.9
And it’s expensive: The national median cost is $9,034 per month for a private nursing home room and $4,500 for a bedroom at an assisted living facility. Expect to pay about $5,148 per month for a home health aide.9
Because regular health insurance is unlikely to cover these costs, long-term care coverage is worth considering.
Diversify your portfolio
Your hard work, savings, and investments built you and your family a nest egg. There are things you can do to help make sure your retirement savings last a lifetime.
Withdrawing from your retirement funds during a market downturn can risk your long-term income. Diversifying can help protect your savings against downturns. A financial professional can help guide you.
Annuities are tax-deferred and can be a big help during your retirement years — providing you with guaranteed income and a sense of security.
Get familiar with Social Security
Social Security is an important source of financial security in retirement for millions of Americans. With pension plans becoming a benefit offered by fewer and fewer employers, Social Security continues to offer:
Lifetime retirement income
Social Security provides guaranteed income annually for life. The amount of your monthly benefit — called your Primary Insurance Amount (PIA) — is determined by how much you earned during your working life.
Cost-of-living adjustments
Social Security benefits may be adjusted annually based on changes in the Consumer Price Index (CPI), a valuable feature to help you offset the eroding effects of inflation.
Spousal and survivor benefits
These benefit options are for spouses or widows who may not qualify for benefits on their own earnings record, or qualify for a smaller benefit.
Learn how your retirement income and pension can affect your benefits and whether you should count on your Social Security to subsidize your retirement.
Leave a living legacy
You’ve taken good care to plan a successful retirement. Now it’s time to be grateful for the fruits of your labor. You might even want to share them with your loved ones.
Many people value experiences over material things. And it’s especially enjoyable to partake in these experiences when you’re in good health.
So, make memories for yourself — and your loved ones — by doing the things you love with them.
Maybe it’s going out to dinner, taking in the latest exhibit at your local museum or going on vacation. You certainly don’t have to foot the bill, but if you have the budget and the desire to do so, go for it! Some retirees would rather show their generous side while they’re alive — and can enjoy it too.
Leading up to (and after) retiring, it’s important to carefully think about what you need to do to make it a success. But it’s also important that you take time to enjoy it. After all, you only retire once.
