Longevity is a risk multiplier in retirement. It exacerbates all other retirement risks. Most retirees will have inadequate retirement funds and Social Security benefits to live into their 90s, much less into their 100s—and that assumes perfect health, a scenario few experience. But that’s exactly what will happen to most baby boomers, as they are poised to live much longer than the preceding generation.
It can be argued longevity is more than just a risk multiplier—it’s a compounding multiplier. Medical expenses and long-term care costs are already the greatest drain on retirement monies rarely built into the budget. If simply living into your 90s is going to generate a short fall in your finances, what are ongoing medical and elder-care costs going to do, but utterly impoverish you at the end of your golden years?
If it isn’t health stealing your wealth, it’s fund fees, taxes and inflation. Most consumers are going to need a quick lesson in pursuing the lowest-fund fees, with the lowest risk for “reasonable returns.” Over a longer lifetime fund charges, plan administration costs and investment advisory fees can erode your real returns. The longer you live, the greater the U.S. deficit and that means higher taxes just to pay the annual interest on the national debt. When you live to age 90 to 100, the cycle of inflation will more than likely return during your lifetime to significantly marginalize you purchasing power. Watch the video interview with popular platform speaker, author, retirement software developer and professor at the American College, Curtis Cloke, address the impact of longevity during retirement.
For baby boomers, there’s little choice. Longevity will compel you to lower the cost of your lifestyle and generate income by working at least part time during retirement. This is the new hybrid retirement. For Generation X and Y, take heed: this is your first warning! Time is still on your side. For the Millennial generation and its succeeding generation, known as Generation Z or iGen, it’s about planning for a future without Social Security as we know it today. It’s about contributing to retirement without deductions. It’s about curtailing your lifestyle now, so your future can be reasonably comfortable.
We are the procrastination nation. Congress kicks the can down the road and we, her citizens, do the same, never believing a day of reckoning will ever occur—but it will. It will appear to us as sudden, but it has been our constant companion all along.
Syndicated financial columnist Steve Savant interviews popular platform speaker, best selling author and adjunct professor Curtis Cloke. Curtis is also a leading retirement software developer and has been ranked as one of the top advisers in the country.