For many baby boomers looking to retire in the next few years, the biggest worry is not whether they can retire, but if they’ll outlive their savings.
It’s a valid concern: One in every four people turning 65 today can expect to live past their 90th birthday, and one in 10 will live past 95, according to the Social Security Administration.
For married couples, there's a 58 percent chance that one of them will live to 90.
With 10,000 boomers turning 65 every day, according to the Pew Research Center, it’s something on the minds of many Americans.
I became a financial advisor because I hated seeing people who’d followed the rules – saved money in a 401(k), put their kids through college, gave to charity – only to reach retirement and find they didn’t have enough to sustain them for more than a few years. It’s not enough to have a certain amount of money in your portfolio, you want to have a guaranteed check coming in in addition to your investments.
Whether you’re years from retirement or planning for it now, these three resolutions will help you prepare fully for financial freedom in the golden years:
- Resolve to plan for expenses in retirement to equal or exceed your expenses today. Many people assume their expenses will decline once they retire – they forget that they’re going to have a lot more free time to do what they love. What are your dreams? Will you want to travel? Take up a new hobby? Meet friends for golf two or three times a week? Those likely are going to be expenses you don’t have now. Also, once you retire, things don’t magically last forever. The rug in the dining room, the fridge in the kitchen – eventually they’ll need to be replaced or repaired. Medical expenses will either appear or increase. Sit down and think about what your ideal retirement looks like, and presume that it will be for at least 30 years. Make a list and take a guess at what those activities cost – even if your retirement is years away. How much money will you need coming in each month or year?
It’s important to start thinking now about where you want to be in retirement and what combination of investments will ensure you have the lifestyle you want for as long as you live.
At 65, you don’t want to be making risky investments because you’re panicking about not having enough money. Now is the time to plan.