Treasurer Loftis Says Retirement Planning Important Given Extended Lifespans, Costs

State Treasurer Curtis Loftis believes one of the benefits of life in the U.S. is that, statistically speaking, there’s a good chance you’ll enjoy many years of retirement. With that comes a bit of sobering reality: retirement requires money.

“Unfortunately, many individuals aren’t prepared when it comes to planning for retirement,” Treasurer Loftis said. “People who stop working at 65 are living into their 80s and even 90s, which means they’re going to need a sizable amount of money to get by, whether they realize it or not.”

Some 40 percent of retirees underestimate the life expectancy of people their age by at least five years, according to a study by the Society of Actuaries.

Part of the problem stems from a misunderstanding of statistics, according to Fortune magazine. Statistics from the Centers for Disease Control and Prevention say that American men born today can expect to live 76.5 years, on average, and American women 81.3. But those numbers reflect life expectancy at birth and are dragged lower by people who die young. Individuals who have made it into their 50s can expect to live much longer.

Here are some strategies in case you’re concerned you may not have enough set aside:

• Work Longer. Just a few more years of working and saving, rather than drawing down assets, can be a life saver, according to Fortune.
• Upgrade Your Portfolio. Instead of moving out of equities as you near 65, consider keeping a larger share of your portfolio in stocks, which tend to be yield more, and have more risk, than bonds. If you’re living longer, you have more time to make up for any downturns that may occur in the stock market.
• Look at long-term insurance. Long-term care policies can help cover the cost of assisted-living care when you’re no longer able to live on your own. This can be important because Medicare, which many retirees rely on for health-care coverage, doesn’t cover nursing-home care. Medicaid only starts paying for assistance after you’ve exhausted your assets.

“It’s not too late to put aside more money for retirement, but it requires action and planning,” Treasurer Loftis said. “The worst thing you can do is head into retirement without a plan.”

See the full article here: How to Invest for a 40-Year Retirement