Depending on who you talk to, someone who retires at age 65 will have another 20 years or so to live. This is a according to the statistics that are published by many government agencies as well as insurance companies. When you hear someone say. Don’t worry about outliving your money, it is difficult to really believe them. It can be a stressful time for many retirees. So it is important to really examine the numbers and determine if your savings will outlast you.
Insurance companies tend to exaggerate on longevity. They will suggest that you may live between 20 and 25 years longer than the average person. They also put fear into consumers wondering whether their money will last during their retirement years. This to encourage you to invest with them and use their investment products.
Outliving Your Savings
Many people worry about whether they will outlive their savings and end up being destitute. They worry about having to sell her house. Or live with family or worse living conditions that are not acceptable to them.
The reality is that most people will not outlive their savings. The statistics of living 20 years beyond your retirement age of 65 are actually quite generous. Most people will not live that long. Planning to live 20 years beyond your retirement age is quite substantial.
The reality for most people is that they should look at how long their parents lived after age 65. Then add five more years because we are more healthy and look after ourselves better than her parents did. This will be an indicator of the real age that you can expect to live.
Based on these calculations you can then figure out how long your money needs to last after your retirement. This is one of the ways that you can calculate your longevity.
Don’t worry about outliving your money
There are actually many other factors that will determine whether you have sufficient retirement money in your savings to last your lifetime.
For example, the stock market may go up or down, your pension from your company may last or not and you may have health issues that dig into your retirement savings. These factors and others are things that you should be thinking about and considering in terms of how much money you spend during your retirement years.
At the same time while you’re healthy you will want to enjoy your retirement years and spend some of your money on travel or some of the other things that are attractive to you.
Living on the income that is generated from your investments is one way to protect your retirement savings. At the same time if you have a significant amount of capital in your retirement plan making sure that you’re diversified and well invested in blue-chip stocks and bonds will also ensure that you do not suffer from crashes in the market.
The average withdrawal rate of 4% appears to be the industry norm of how much money should be withdrawn from your retirement savings plan. If you can generate income from the interest income from bonds, and from stocks, to dividends this will help to achieve a significant amount of that 4% and protect your capital through your retirement years.
We are writing many articles about these subjects and look forward to comments from people who are going through and planning their retirement and thinking about the same issues. Your comments and suggestions are welcome.
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