Are You Underestimating Years In Retirement

Are You Underestimating Your Years in Retirement?

Updated on Nov 02 2018


Life expectancy is increasing with today’s technological and medical advances, yet many people are not adjusting their retirement planning to include income for a longer retirement. Learn why you may be underestimating your years in retirement and why it’s so crucial to start proactively planning for your golden years.

Many Americans put retirement savings on the backburner as they have other “priorities” in their 20s, 30s and even 40s. This is a problem for many reasons:

  1. People are living longer in the 21st century
  2. retirement planning is more of an individual effort, rather than a built-in work benefit
  3. Federal retirement resources are being drained and in danger of going bankrupt

Social Security won’t be enough to sustain the average senior in years to come, which is why it’s so important to independently and diligently save for retirement during your working years. The Stanford Center on Longevity discusses:

“The failure to adequately estimate the number of years in retirement is experienced both by individuals as they plan their own retirement as well as by governments and institutions as they model pension and entitlement program expenses. The resulting financial implications is quite large [for everyone involved].”

Investment Time Horizon and Preparing for a Successful Retirement

It’s important to consider how much money you’ll need to accumulate in time for retirement. The first step in retirement planning is to get organized. Here are a few factors to consider:

  • Your lifestyle goals
  • Your estimated expenses
  • Your projected life expectancy

Projected life expectancy is the factor that many Americans might be making the mistake of underestimating.

Infact, in a Nationwide and InvestmentNews study in the 21st century, workers across the board estimated their retirement length at 22 years. However, financial advisors think it’s prudent to “tack eight years onto that figure.”

In addition, the Stanford Center on Longevity notes that many people are “failing to adjust perceptions to current reality” in the following ways:

  • Retirement expectations and the projected dollar amount of income needed have not been realized.
  • The actual age of retirement has increased slowly and there is a considerable gap between retirement expectations and experience. The median “expected” retirement age is 65, the median “actual” age is 61.
  • There is a large discrepancy between pre-retirement confidence in having paid employment for as long as needed compared to the actual experience of retirees.
  • Vagueness about whether there will be employment opportunities available for those who want to continue working.

To proactively prepare for retirement, organization is key. Enlisting a professional financial advisor’s help to help you get a realistic view of your financial situation and retirement potential can be helpful.

Get Educated for a Successful Financial Future

Retirement planning doesn’t always take precedence in daily life, but it’s important to get your financial ducks in a row. Here are a few articles to help you get started:

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