We all want to live long lives. We all hope to live long lives. But are we financially prepared for this longevity?
Before we get to the topic of preparedness, let’s look at a couple of interesting findings from a 2022 survey conducted by Age Wave and Edward Jones:
Retirees surveyed said on average they expect to live to age 89, and said the ideal length of retirement is 29 years.
When asked if they want to live to be 100, almost 70% of respondents said “yes”. The main reason for this desire for long life? To spend more years with your family and friends.
Of course, none of us can see into the future and know how long we’ll be around. But with advances in medical care and greater awareness of healthy lifestyles, these aspirations have a real basis in reality.
However, if you want to enjoy a longer life and extra years with your loved ones, you need to make sure your finances are in good shape as well. How can you make this happen?
Here are some basic steps to follow:
Save and invest early and often. This may be the oldest financial tip, but it’s still valid. The earlier you start saving and investing for your retirement, the bigger your potential savings. Consider this: If you started saving just $5,000 a year at age 25 and earned a hypothetical 6.5% annual rate of return and didn’t take any early withdrawals, you’d end up with $935,000 by age 65. But if you wait until 35 to start saving and investing, and get the same hypothetical 6.5% return, again with no early withdrawals, you’ll only end up with $460,000. And if you didn’t start saving until age 45, you’d end up with just over $200,000, again assuming the same 6.5% return.
Consider debt. You may not want to take on certain debts when you retire. So, while you’re still working, try to reduce unwanted debt, especially debt that doesn’t offer the financial benefits of tax-deductible interest payments. The lower your debt, the more you can save and invest for the future.
Keep checking your progress. It’s important to track the progress you need to make toward your goal of a comfortable retirement. In the short term, your investment balances can fluctuate, especially in volatile financial markets, as we saw earlier this year. But you’ll get a clearer picture of your situation if you look at the long-term results. For example, have your accounts grown over the last 10 years as much as you expected? And looking ahead, do you think you’re in good shape or will you need to make some changes to your investment strategy? Note that if you’re 50 or older, you can make “catch-up” contributions to your IRA and 401(k) that allow you to exceed the regular limits. You may also want to adjust your investment mix as you approach retirement to potentially reduce your risk exposure.
Hopefully, you will enjoy many years of a healthy and happy retirement. And you can help support that vision by carefully considering your financial moves and making the ones that are right for you.
Jennifer Barrett (AAMS) is a local financial advisor at Edward Jones.
225-612-0413 | jennifer.barrett@edwardjones.com
Edward Jones. SIPC member.
Edward Jones, its employees and financial advisors are not estate planners and cannot provide tax or legal advice. You should consult your estate planning attorney or qualified tax advisor regarding your situation.
