Modern advancements have made great strides in many sectors of society currently, but one of the most consequential is the extension of expected lifespans. Medical advancements as well as expanded access to nutritious food and clean water globally means that present and future generations will have lives that exceed the lifespans of past generations. There are many obvious benefits to a longer life, but there are certain repercussions that these people with extended lifespans will have to face if they intend to maintain their lifestyles throughout retirement. The simple assessment is that the people that are living longer will need more money to fund these extended lives throughout their retirement.
A simple average of American lives reveals a lifespan of approximately 80 years, but this number is greatly tempered by tragic events like deaths that occur in infancy or early life, and young adults who are victims of crime and traffic accidents. However, statistically, people that arrive at adulthood will most often live a life that exceeds the average lifespan, and for married couples that reach the age of 65, at least one will live to the 80 year threshold, and many will live a substantial amount of years beyond it. Furthermore, people that live to 90 years of age will have spent 25 or more years in their retirement.
Many of these people will receive stagnant Social Security payments in their retirement years, but these fixed payments are rarely enough to sustain a person’s normal needs. Because of this problem, people often save money in other investment products like 401k plans and IRAs. These people save this money to compensate for the deficit that is created between the fixed Social Security payments and the needs of the retiree. However, even these alternative investments may not sustain a person throughout an extended retirement that could possibly last as long as thirty years for this generation.
People that are contemplating the possibility of outliving their finances should explore options to turn lump sums into guaranteed revenue streams. One way to do this would be to invest in an annuity that would provide monthly payments for a lifetime instead of a regular retirement account. There are many factors that determine whether or not this is a good option for a person’s particular circumstances, but it is an option, and some careful planning will be needed to support oneself during an extended retirement.