Is 80 the New 60? 6 Retirement Questions to Ask Yourself Now

According to the Social Security Administration, about one fourth of the 65-year-olds today will live past the age of 90, and one in ten will live past the ripe age of 95. The latest research shows that this current generation of men is expected to live 7 years longer than the previous generation; women are expected to live 5 years longer.

This increase in life expectancy was the impetus for two of the leading authorities on longevity and aging to create the Stanford Center on Longevity in 2007. Their research and initiatives have raised a few salient questions for wealth managers of all kinds:

  • Have you planned for the increase in your (or your clients’) life expectancy?

If the answer is no, you are not alone. The research shows that two-thirds of men in pre-retirement underestimate the life expectancy of the average 65-year-old male. Close to half of those men aren’t even close; they underestimate by 5 or more years. About half of women in the pre-retirement stage underestimate the life expectancy for women as well.

Key Take-away: This might be a great time to take another look at your life insurance policies to ensure that you have the coverage that you need for as long as you need it.

  • Have you set realistic expectations for the timing of your retirement?

You may have less time than you think before retirement sets in. Many people expect to retire at age 65, but the most common retirement age is actually 61.

This erroneous perception may be fueled by the fact that in 1950, the average retirement age was 70, and the life expectancy was about 78. The former 8-year retirement is a far cry from the current norm; now people are looking at a retirement period of over 20 years in some cases (for example, retirement at age 62 and living to age 85).

Key Take-away: You may have less money from full-time employment in your retirement than you expected (unless you work longer than expected). It might be prudent to adjust your plans to ensure adequate savings. For example, longer retirement periods may make certain annuities more attractive because you can guarantee a fixed income for your entire lifespan; the longer your live, the more money you make.

  • Have your plans compensated for taxes?

During your retirement, you may begin to liquidate tax-deferred assets, and income taxes will become due. Even a portion of your social security benefits can be taxable (depending on income levels). And after your death, assuming it is after 2026, if you have more than $5 million in your estate, it will be subject to estate taxes of 40% as well.

Key Take-away: Consider converting qualified retirement plan dollars and other highly appreciated assets to tax advantaged vehicles like a Roth IRA and life insurance via the Qualified Leverage Strategy(™).

  • Have you factored in a potential increase in healthcare costs?

People with longer life expectancies can expect to spend more on healthcare over the remainder of their life simply because they are living longer. The need for long-term care can be hard to predict.

Key Take-away: Without knowing how healthy you will be, or how long you will live, having a plan to pay medical bills is crucial. This is a good time to make sure that your life insurance policy includes an option for drawing down on the death benefit to pay for end-of-life care if the need arises.

  • Have you planned for a cost of living increase in retirement?

More than 70% of pre-retirees fail to calculate the effects of inflation on their retirement. If the same amount of money doesn’t stretch as far, you will need more money each year just to maintain your standard of living.

Key Take-away: You may consider building annual increases in your retirement income. For example, an annuity product (or even automatic payouts from retirement accounts) can often be set up to increase over time.

  • Have you reached out to a professional for help?

The majority of Americans fail to plan for retirement at all. Fewer than 20% of Americans over 50 have successfully created a retirement plan. As a matter of fact, most people have not even tried to calculate how much money they will need in retirement.

Key Take-away: If you are unsure of where to begin, get help. Financial professionals can help you set up a plan for saving and/or withdrawing funds. Putting in a little time and money now could save you a lot of time and money later.

 

Axia Global is a boutique wealth management firm that specializes in helping high net worth individuals preserve their assets for retirement and for the next generation. Look to us to help advise you on how to develop a strategy that is tailor-made for you or your affluent clients. It is our goal to make a measurable difference in your financial life. Contact us today.

Note: the statements above should not be considered financial, legal or tax advice, but ideas for careful consideration with your trusted financial advisors and lawyers. For current tax or legal advice, please consult with an accountant or an attorney.

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About Axia Global

For decades, J. Michael Roney – Founder of Axia Global, has worked alongside top financial and legal professionals to craft profitable solutions for even the most complex wealth preservation and estate planning cases. Together, the team at Axia Global has nearly a century of combined experience in the financial services sector.