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Retirement Strategy: Money & Longevity Thumbnail

Retirement Strategy: Money & Longevity

For medical or university professionals considering your retirement strategy, how much thought have you given to how long you might live? It can be an uncomfortable reality to consider, but this shouldn't dissuade you from giving it some serious thought.

For many people preparing for retirement, one of the biggest fears is running out of money. If you've lived to 65 years, you will probably live to at least 84 years if you're male and 87 years if you're female, according to Social Security tables. These are only estimates, but it's important to keep in mind that you might live much longer than you expect, and some household members could outlive others by many years.1

You might, in fact, live to 100 years and beyond: the National Institute on Aging anticipates that the number of centenarians will grow by a factor of 10 during the first half of this century, representing a host of challenges for anyone attempting to devise a retirement strategy.1

For example, healthcare costs must be incorporated. As you age, your healthcare needs will likely grow from simple doctor's visits to potentially living in an extended care facility. These costs naturally increase over time, whether through inflation, market volatility, or other factors. So, while you can look at today's prices as a guide, you will likely need much more money to cover your healthcare. Medicare will help, but it doesn't cover everything, including a lengthy stay in extended care.2

Your retirement strategy might include a spending plan that considers the likelihood that you will want to travel, pursue your interests, and spend time with family, as well as that allows for a long life and covers the associated financial expenditures. Unless you are working beyond retirement age, it can be difficult to make up for a market dip, emergency expense, or heavy spending, so your strategy should cover many circumstances.

How much will you need to withdraw per year without diminishing your account too quickly, while still controlling for inflation and other factors? Calculating this as part of your retirement strategy may be essential. While some financial professionals have downplayed the 4% rule in recent years—the amount of your investments used in the first year of retirement—and have revised it upward or downward as needed, the theory is that you may be able to live on your retirement funds for upwards of 30 years or more.3

Other factors to consider include focusing on tax-efficient withdrawals from your 401(k), 401(a) or 403(b) retirement accounts. Do you have any guaranteed income that comes from a pension? You might also decide that working longer or taking Social Security later (allowing for larger payouts per month) could extend your retirement strategy further. Of course, these topics and others will be addressed while working with a financial professional to form a retirement strategy and put it into action. If nothing else, you should now appreciate what a significant undertaking your retirement strategy represents, as well as how relieving it will be to have help along the way.

While your financial situation is an important consideration in your strategy, you also want to look at designing a purposeful retirement that can continue to add meaning to your life after your working years are over.  Finding a financial professional that specializes in Life Planning can help bridge the gap between your financial reality and the life you were meant to live.

Jeff Spitzmiller is the CEO of Ohana Wealth & Life Planning based in Cincinnati, OH.   Ohana specializes in life and financial planning along with ESG (Environmental, Social, Governance) investing principles for professionals in the healthcare and university fields.   The firm is an independent financial advisor and a fee-only fiduciary.  Jeff and the firm also enjoy volunteering and giving back to the local community.  You can reach Jeff at jeff@ohanaplanning.com.

  1. https://www.rbcwealthmanagement.com/en-us/insights/will-you-outlive-your-money-in-retirement-3-risks-to-plan-for-now
  2. https://www.npr.org/2022/02/19/1081875948/inflation-has-many-retirees-worried-about-outliving-their-savings
  3. https://www.cnbc.com/select/what-is-the-4-percent-retirement-savings-rule/

This was prepared by Ohana Wealth & Life Planning; a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Ohana Wealth & Life Planning Form ADV Part 2A & 2B can be obtained by written request directly to: Ohana Wealth & Life Planning 212 East Third St. Ste. #100 Cincinnati, OH 45202. All opinions and estimates constitute the firm’s judgment as of the date of this report and are subject to change without notice. This is provided to investment advisory services clients of Ohana Wealth & Life Planning. It is not intended as an offer or solicitation with respect to the purchase or sale of any security. Investing may involve risk including loss of principal. Investment returns, particularly over shorter time periods are highly dependent on trends in the various investment markets. Past performance is no guarantee of future results. The information herein was obtained from various sources. Ohana Wealth & Life Planning does not guarantee the accuracy or completeness of such information provided by third parties. The information given is as of the date indicated and believed to be reliable. Ohana Wealth & Life Planning assumes no obligation to update this information, or to advise on further developments relating to it. This is for informational purposes only. It does not address specific investment objectives, or the financial situation and the particular needs of any person.  An index is a portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.