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Financial Complexities of Living a Longer Life


Americans are living longer. That’s the good news. The bad news is that most people aren’t financially prepared. Many Baby Boomers will be in retirement for more than 20 years but many aren’t saving and investing with a longer life expectancy in mind.

There are serious consequences to financial planning around the wrong life expectancy. Some retirees are working later in life; others live in fear of running out of money, while others are leaving less of a legacy than they hoped. No one wants to run out of money in retirement.

How Long Should You Expect to Live?

The Social Security Administration notes that at 65 years old, the average man can expect to live to roughly 84.3 years of age, whereas the average 65-year-old woman can expect to live until age 86.6. This means that on average, Americans can expect to spend about 20 years in retirement.

However, there is a strong chance that you should plan to be in retirement much longer than 20 years. One out of every four 65-year-olds will live past the age of 90, and one out of every 10 will live past the age of 95. Are you prepared for three decades of retirement? Most people aren’t.

With these figures in mind, here are three steps that can be taken to ensure your financial longevity

Step 1) Develop a Clear Vision of Your Retirement Lifestyle

To create a well-conceived plan with the will to faithfully execute it, you need a clear vision of your lifestyle in retirement. Start by defining your goals and asking yourself.

  • Where will I live?

  • Where will I travel?

  • What will I drive?

  • How will my hobbies change?

  • Where will I donate my time and money?

It’s important to factor realistic spending assumptions into the cost of your retirement, based on your goals and desired lifestyle. Your plan should also include contingencies for healthcare costs and unexpected expenses.

Step 2) Adjust Your Investment Strategies

Start to plan for a longer retirement by adjusting your investment strategies, such as saving more, being slightly more (or less) aggressive with your investment strategy, etc. AAFMAA Wealth Management and Trust LLC ensures our Members have these bases covered. Call us and together we can review your investment strategies. We’re experienced in retirement planning and can help you if: 

  • You are within five years of retirement

  • You have recently experienced a significant change in your income

  • Your investment accounts are exposed to higher risk due to natural market fluctuations

  • You aren't confident that you are still on target to meet your retirement and legacy goals

Step 3) Consider Your Health Insurance Options

Health insurance is the most expensive and bothersome insurance the average individual carries. Unfortunately, many people approach retirement and believe that the burden of health insurance will be lifted. In reality, even when covered by Medicare and other supplemental insurance plans, there are still substantial costs left for the individual to pay.

In addition to premiums, deductibles, and co-pays, prescription drug costs are likely to rise. In the last decade, the average annual cost of one brand-new drug used to treat chronic health conditions cost a senior $5,800 (2015), compared to $1,800 just a decade earlier (AARP) — a $4, 000 difference. Planning for a longer retirement requires keeping a keen eye on the rising cost of healthcare in the US.

Understanding the stresses that come with ensuring your financial longevity, AAFMAA Wealth Management and Trust is here to help you sort out the complications of an ever-changing financial plan. Contact us at [email protected] to request a financial planning engagement to prepare for your retirement, legacy, and estate plans. Together, we’ll create a clear strategy that points you toward a comfortable retirement of any duration.

Disclosure: Information provided by AAFMAA Wealth Management & Trust LLC is not intended to be specific financial advice. AAFMAA Wealth Management & Trust does not provide tax or legal advice. Nothing contained in this communication should be interpreted as such. We encourage you to seek guidance from your tax or legal advisor.