By Eric Tashlein
Your Finances
Eric Tashlein.
You have heard the alarm sounded: your retirement funds need to last longer because you are likely to live longer than past generations. It’s true that longer lifespans are a major threat to your retirement security, and financial planners are spending significant time and effort tackling this growing risk.
Let’s look at some figures. In November, the Centers for Disease Control and Prevention in Atlanta released new data on U.S. life expectancy that raised alarm for a different reason. In 2017, life expectancy at birth actually fell slightly for the third year in a row. Due primarily to a rising tide of opioid overdose deaths and suicides, life expectancy at birth (for both sexes and all races together) was 78.6 years in 2017, down from 78.9 in 2014.
But the widespread news coverage often failed to mention a more hopeful statistic: life expectancy at age 65 has actually increased, the CDC reported. A U.S. citizen at age 65 in 2017 could expect to live another 19.5 years. How does that compare with previous years? Expected lifespan at age 65 has steadily risen, from 13.9 years in 1950 to 19.5 years today.
That’s an added 5.6 years, for a 40.2 percent increase. In other words, your nest egg has to last 40 percent longer today than it had to for a 1950 retiree.
If you are still a decade or two from 65, what can you do? Here are some steps you can take:
Learn about retirement finances. Understand the Social Security system, know what Medicare does not cover, and be aware that your IRA and 401(k) plan savings will be taxed starting at age 70.5 (unless you are investing after-tax funds in Roth plans).
Set up and follow a financial plan. You need a plan for saving, investing and paying taxes. You have to follow a roadmap to reach financial security, and a financial advisor can help you create a comprehensive financial plan based on your individual situation and goals.
Take care of your health. Since health care costs continue to rise, it makes sense for you to consider purchasing long-term care insurance and disability insurance. And put aside money for other health care needs such as a Medicare supplement insurance policy.
Earn, save and invest. Find ways to increase your income. Make savings your top priority. Build a diversified investment portfolio and periodically rebalance, or have an experienced financial planner handle it for you.
Take solid steps today to ensure your financial security tomorrow. Set up a budget and live below your means. Place the maximum amount in your retirement plans. Your future self will thank you.
Eric Tashlein is a Certified Financial Planner professional™ and founding Principal of Connecticut Capital Management Group, LLC, 2 Schooner Lane, Suite 1-12, in Milford. He can be reached at 203-877-1520 or through connecticutcapital.com. This is for informational purposes only and should not be construed as personalized investment advice or legal/tax advice. Please consult your advisor/attorney/tax advisor. Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., A Registered Investment Advisor. Cambridge Investment Research Inc., and Connecticut Capital Management Group, LLC are not affiliated.