Pro-Active Long-Term Planning Will Help You Afford a Longer Retirement

Ted Hughes |

Retirement in the 21st century looks a lot different than retirement at the turn of the 20th century. First and foremost, the concept of stepping away from a career or life on the farm was relatively unheard of at the turn of the 20th century. Another major shift has been in the average life expectancy of Americans. White men born in 1900 had a life expectancy of 47 years, while white women had a life expectancy of 49 years. Members of those two ethnic groups born in 2000 had life expectancies that had nearly doubled to 75 and 80, respectively. With the potential for a long retirement awaiting those who retire in the 21st century, a pro-active approach to long-term retirement planning is a necessity.


Prepare for a Successful Retirement

You cannot plan proactively without starting early. If you want to ensure that your retirement income lasts as long, or longer, than your physical body, it’ll require an early start. You cannot leave retirement planning to the last minute and expect to have a smooth transition into retirement. Most advisors recommend looking into a successful retirement and mapping out a plan well before the age of 50.

While you should start saving money as soon as you enter the workforce, saving money and mapping out a retirement plan are entirely different. In your 20s, you cannot make judgments on the how the fiscal landscape will change in the years to come, such as inflation, market surges and recessions, changes in health care costs, and more. In your 50s, you are only looking forward about a decade and can make more solid determinations for asset allocation and retirement funding.

If you do want to start earlier than your 50s, there is no harm in doing so. Just remember to revisit your retirement plan every decade to update it as the landscape around you changes, so it remains relevant.


"Recreate" a Paycheck for Retirement Income in Advance

As you proactively plan for retirement, you should consider "recreating" a paycheck for yourself in retirement. As it relates to private retirement accounts, pensions, or 401(k) plans, you should make sure you are adequately funding these accounts throughout your career so that you do not have to rely solely on a Social Security check to make ends meet. The more money you put aside today, the more likely you are to have a steady "paycheck" that you can draw on each month and year throughout your retirement. Remember, the average American retiree will receive just $1,461 per month in 2019.

There are, of course, other ways to recreate a paycheck before you head into retirement. For example, if you choose to invest some of your income throughout your career in investment properties, you could earn a nice steady stream of money each month once you retire by continuing to rent those properties.


Create a Retirement Lifestyle that is Engaging and Joyful

Finally, plan now for a retirement lifestyle that helps you engage with others and provides a sense of joy. This means ensuring that you have the money available to continue pursuing the hobbies you have built over the years and to spend time with family and friends. CNN cited a study that found retirees who reported being "happy, excited, and content" were up to 35% less likely to die during a five-year period.


Contact us at Hughes Warren today for any questions you may have about this or any of our other articles.