Saving enough for your 90s - Ahwatukee Foothills News: Money

default avatar
Welcome to the site! Login or Signup below.
|
||
Logout|My Dashboard

Saving enough for your 90s

Print
Font Size:
Default font size
Larger font size

William Hertzog

Related Stories

Posted: Friday, December 14, 2012 2:49 pm

Thanks to a range of factors — including medical advances, healthier eating habits and better fitness — Americans are living longer lives. Life expectancy in the U.S. recently hit a record 78.7 years, and the number of Americans living past age 90 has nearly tripled during the last 30 years. But while living well into our 90s is a dream for many of us, the possibility of outliving our savings serves as an eye-opener.

“It’s a universal concern: No matter how much you have accumulated, everybody is worried about making their money last through retirement,” says Donna Peterson, senior vice president in retail retirement at Wells Fargo. A recent survey found that more than half of baby boomers fear outliving their savings more than they do dying.

Fortunately, making a few changes to your financial situation now can help increase the chance that your savings will last your lifetime — no matter how long it spans.

Create ongoing income. Peterson suggests aiming to replace 80 percent to 100 percent of your working income in retirement, but she admits that will vary with time. “Early in retirement, while you’re young and active, you may need to replace 110 percent of what you earned,” she says. “As you age and become more sedentary, your costs may go down.”

Aim to keep growing. On the cusp of retirement, some investors may be content to shift their funds from stocks into certificates of deposit or other conservative investments in order to protect all they’ve saved in their nest egg. But that may be a mistake.

Since retirement can last several decades, you’ll likely need to harness the growth potential of stocks to keep inflation from eroding your savings. Although they come with increased risk, stocks offer better potential for long-term growth than bonds and cash investments. Your financial advisor can help you find a mix of stocks, bonds and cash investments that offers an appropriate balance of risk and return potential.

Plan for long-term care. As you age, you’re more likely to sustain an injury or develop an illness that requires long-term care. But that care — whether in a nursing home or through an in-home health provider — can be very expensive. The national median cost of a single year in a private nursing home is now $87,235, according to insurer MetLife. One strategy to these potential medical costs is long-term care (LTC) insurance, which is designed to cover expenses if you become physically or cognitively impaired.

If you opt for LTC insurance, Peterson suggests buying your policy when you’re in your 50s because your premiums are likely to be more affordable than if you purchased a policy later.

Consider keeping a paycheck. A simple way to stretch your retirement savings is to work longer. Economists Alicia H. Munnell and Steven Sass from the Center for Retirement Research at Boston College notes that delaying retirement by just three to four years — from 62 to 66, for instance — may boost your retirement income by a third.

Working longer can help by:

• Boosting your monthly Social Security benefits (by waiting at least until you are eligible to claim full benefits).

• Increasing the time you spend accumulating a 401(k) balance (through contributions and potential for growth of investments).

• Giving you access to employer-provided health care (which can allow you to avoid paying extra for your own health insurance policy, if you retire before you’re eligible).

• Reducing the amount of time you rely on your retirement savings (income and benefits from employment can offset the need to tap a nest egg — and again, allow more time for assets to work in the market)

A very long retirement is a blessing and a risk. Fortunately, it’s a risk you can plan for, by choosing the financial strategies that make the most sense for you, and reviewing your retirement plan regularly. Just don’t wait — by planning now, you’re more likely to enjoy the luxury of time later. Here are some helpful websites:

• U.S. Centers for Disease Control & Prevention, http://www.cdc.gov/nchs/data/nvsr/nvsr60/nvsr60_04.pdf.

• U.S. Census Bureau, http://www.census.gov/newsroom/releases/archives/aging_population/cb11-194.html.

• Allianz Life Insurance Co. of North America, https://www.allianzlife.com/content/public/Literature/Documents/ENT-993.pdf.

• MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs, August, 2011, http://www.metlife.com/mmi/research/2011-market-survey-long-term-care-costs.html.

• Center for Retirement Research, “Working Longer: The Solution to the Retirement Income Challenge,” 2008, http://crr.bc.edu/images/stories/myths_and_realities.pdf.

• William J. Hertzog, CIMA, is first vice president of investments for Wells Fargo Advisors, LLC, in Ahwatukee. Reach him at (602) 952-5133 or www.TheHertzogGroup.com. Wells Fargo Advisors, LLC, member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company. Note: Investment and insurance products are not FDIC insured, not bank guaranteed and may lose value.

More about

More about

More about

Comments have been disabled.

Phoenix Things to do: 11 events to check out this week around the Valley (June 27

PHOENIX - Another hot weekend in Arizona over! If you're planning ahead, its a holiday weekend. Technically, the Fourth of July is a week away…

Published: June 26, 2016 - 11:00 pm @ http://www.abc15.com/entertainment/events/phoenix-…

New wildfire: Racetrack Fire burning northeast of Tucson

TUCSON, AZ - A new wildfire has ignited in the mountains northeast of Tucson. Officials he fire started near Redington Road in the Catalina mo…

Published: June 26, 2016 - 10:02 pm @ http://www.abc15.com/news/region-central-southern-…

WATCH: Are the Arizona Cardinals on the verge of replacing the Dallas Cowboys as America's Team?

"All or Nothing," an eight-part documentary series that details the Arizona Cardinals' 2015 season both on and off the field, will debut on Am…

Published: June 26, 2016 - 10:00 pm @ http://www.abc15.com/sports/sports-blogs-local/wat…

The 8 most popular jobs in the marijuana industry

Topics: AlterNet, Arizona, Maine, marijuana, marijuana edibles, Nevada, Pot, Business News, Life News This article originally appeared on Alte…

Published: June 26, 2016 - 9:28 pm @ http://www.salon.com/2016/06/24/the_8_most_popular…

Pope says Church should ask gay community for forgiveness for past treatment

Driving in Canada Canada - a home away from home Canada, it's time to change! Living with a disability in Indo-Canadian society The empire str…

Published: June 26, 2016 - 9:32 pm @ http://timesofindia.indiatimes.com/world/europe/Po…

Wearable Tech Catapulting Health and Fitness into the Future

Do you think your smartwatch, with its heart rate monitor, step counter, calorie tracker and message notifications, is impressive? You ain’t s…

Published: June 26, 2016 - 8:58 pm @ http://www.corespirit.com/wearable-technology-cata…

Brewer vs. O'Malley: Talk of racists and fascists

Former Govs. Martin O’Malley and Jan Brewer tussled on Sunday morning over Donald Trump’s rhetoric, with O’Malley ultimately telling Brewer: “…

Published: June 26, 2016 - 7:28 pm @ http://www.politico.com/story/2016/06/brewer-omall…

Phoenix fire responds after coaster gets stuck 60 to 70 feet in air at Castles N' Coasters

PHOENIX - The Phoenix Fire Department is on the scene trying to come up with a plan to rescue three people suspended dozens of feet in the air…

Published: June 26, 2016 - 7:00 pm @ http://www.abc15.com/news/region-phoenix-metro/cen…

Joanne Ostrow Among Denver Post Buyout Takers, Shrinkage Goal Not Met

Michael Roberts A A Irony alert: The Denver Post's internal communication about employees taking a buyout offer announced in April included a …

Published: June 26, 2016 - 6:56 pm @ http://www.westword.com/news/joanne-ostrow-among-d…

How Housing’s New Players Spiraled Into Banks’ Old Mistakes

The idea is that banks should follow an implicit social contract: In return for government loans and other support, they are expected to serve…

Published: June 26, 2016 - 6:39 pm @ http://www.nytimes.com/2016/06/27/business/dealboo…

Facebook

ahwatukee.com on Facebook

Twitter

ahwatukee.com on Twitter

RSS

Subscribe to ahwatukee.com via RSS

RSS Feeds

Spacer4px

Most Popular

Online poll

Loading…