Most individuals look forward to retirement. No more worries regarding your job or education – just relaxation. However, life expectancy can change this time of relaxation. With higher life expectancies, you can also expect a longer retirement, which is not something that is typically planned for. In fact, most Americans will not be able to afford retirement because of the lack of savings, income, and retirement plans. You must consider how life expectancies will impact how you save.
The Stats
After 1950 when childhood infectious diseases were put under control, life expectancies increased. However, complicated adult conditions started to become more apparent and had to be addressed. Regardless, the life expectancy continued to increase. A National Academy of Science study predicted that by 2015, the American life expectancy will be approximately 82.2 years old. This indicates that Americans will spend a quarter of their lives in retirement. To put this in perspective, in 2010, only 19 percent of Americans spent time in retirement. Although this is a general survey and this will not be the case for every individual, it is important that you consider this information when you plan for retirement. It is always better to be more prepared than not at all!
What You Should Consider
Health Conditions. As mentioned earlier, with longer life expectancies come more adult complications. One condition that is expected to increase 300 percent by 2050 is Alzheimer’s disease. Every individual is unique, so we cannot say this applies to the entire population. However, consider how you would plan if this were to be your situation. Although it may not be a pleasant thought, it is a discussion you must have with your financial advisor.
Lifestyle. The lifestyle you maintain now is crucial for the lifestyle you will live in retirement. Although your family history will play a part in your health during retirement, it is crucial you remember that your risk can be reduced. Mortality rates can be decreased through exercise, a healthy diet, and medication. Take the time to care for your body to make retirement more enjoyable.
Health Care Costs. If you adapt your lifestyle to improve your health, you can prevent future health care costs. Not entirely, of course, but the cost can definitely decrease! However, it is important to assume that your health care costs will be higher. As mentioned before, always be more prepared. Set aside more money toward retirement for you to afford the costs. This includes saving and investing in 401(k)’s or the like. It may also be beneficial to retire later to get a larger Social Security payout. Remember that Medicare, Medicaid, and other private insurance companies may assist with health care costs, as well.
Most Americans believe they will live shorter lives than they expect. With this mindset, many costs can be overlooked. It is crucial you consider these factors when planning for retirement to prevent future headaches.
Genivity is here to help. We place emphasis on helping advisors with goal-based financial planning that incorporates health wealth factors to provide personalized reporting. Genivity can assist you in determining how your current lifestyle will impact your future health during retirement. It determines factors to consider when planning for retirement, including your estimated life expectancy. To determine how your health impacts your retirement plan, talk to your financial advisor about Genivity’s HALO.