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Why, and how, to plan for a very long life Provided by RBC Wealth Management and Laura Herrera
During your retirement years, when you rely on some of your investments for income, you need growth potential in your portfolio as well. Growth may help you prepare for a longer time horizon.
Costs are going up, too
Life spans are increasing According to the National Center for Health Statistics, a 65-year-old man is expected to live another 17.9 years (to age 82.9). And a 65-year-old woman can anticipate living another 20.5 years (to age 85.5). These numbers have been repeatedly revised upward in recent years, indicating a clear trend toward greater longevity. For further proof, the Centers for Disease Control and Prevention reports that the population of U.S. centenarians (those reaching 100 years of age) has grown by 44 percent since the year 2000. Given these facts, you might want to review your portfolio to determine if it is well-positioned to help sustain you for a longer lifetime than you may once have envisioned – keeping in mind that investing successfully for longevity is more than a matter of how much you invest. You may also want to reevaluate how you are investing.
Until recently, inflation had been low for several years. But even at a relatively low 3 percent inflation rate, prices double roughly every 25 years. Depending on your personal needs, your spending may increase over time. For example, you may pay for more doctor’s office visits and prescriptions to help you stay healthy as you get older. To help your purchasing power keep up with inflation, it may be practical to diversify conservative portfolios heavy on fixed income allocations by reallocating a portion toward conservative equity investments that may provide the growth you need for a longer retirement. By planning for greater longevity, you can help yourself feel more confident about your ability to enjoy a long and happy retirement. Asset allocation and diversification do not assure a profit or protect against loss. This article is provided by RBC Wealth Management on behalf of Laura Herrera, a Financial Adviser at RBC Wealth Management, and may not be exclusive to this publication. The information included in this article is not intended to be used as the primary basis for making investment decisions. RBC Wealth Management does not endorse this organization or publication. Consult your investment professional for additional information and guidance. Non-Deposit Investment Products: Not FDIC Insured Not Bank Guaranteed May Lose Value RBC Wealth Management is a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC.
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hen creating a long-term investment strategy, think about your goals, circumstances, risk tolerance and liquidity needs. But you should also place considerable weight on one other factor: your projected longevity. Your estimated life span can help determine how much you need to save and invest, how much you can afford to withdraw each year from your retirement accounts, how much insurance to carry, and how much you may be able to leave to your family. Of course, none of us can say for sure how long we will live. We might look at our family history of longevity and our own health status for clues. But a growing body of evidence suggests a lot of us are actually underestimating how long we are going to be around.
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