Actually, it’s not new, but investors and financial advisors have given it a name: the longevity risk.
The longevity risk is the good news/bad news that modern health care has extended the average life span, which is the good news part. The bad news part is that many of us may outlive our retirement plan.
Live Long and Prosper (Maybe)
That’s the longevity risk.Like I said, it’s been around for some time and most financial advisors and folks working in the retirement planning field have been talking up the dangers of outliving your money in retirement for some time now.
In the last couple of years, the interest has really picked up as Baby Boomers get serious about their retirement and start doing the math.
In too many cases, the numbers aren’t pretty. Thanks to poorly managed pension plans and employers’ handing off responsibility for funding retirement to the employees, many people nearing retirement are worried.
Big Worry
Longevity risk is at the top of their list of worries.Dreams of a retirement spent traveling or spoiling grandchildren are giving way to part-time jobs Wal-Mart or putting off retiring for extra years to build up the nest egg.
When you are planning your retirement investment strategy, remember that people retiring at 65 may have to fund 20 plus years of retirement with their savings.
For most people, this means staying somewhat aggressive right up to and into retirement with at least a portion of their portfolio if they hope to sustain a lengthy retirement.
Women in particular should pay attention to the longevity risk, since they will live longer than many according to actuarial projections.
Conclusion
For most people, the days of playing it very conservative in retirement won’t get the job done, especially if inflation continues to be a factor in the economy. A long retirement can be a blessing if you have the money to enjoy it.Articles on Investing for Retirement in this Series
Tough Choices for Stock Investors Facing Retirement
What to Do If You Lose Your 401(k) Match
Can Your 401(k) Be Resurrected?
Investing to Avoid the Longevity Risk
Time to Re-Think Role of Stocks in Retirement
Don't be too Conservative with Stocks in Retirement
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