What Happens if You Run Out of Money Because You Live Too Long?

How long could my life possibly be after retirement? You can make an educated guess, but no one really knows how long they'll live. Basically, you need to put aside enough money to keep you comfortable no longer how long your life ends up being.

Retirement Plan Options

There are many things to take into consideration when thinking about retirement and life expectancy should be at the top of the list. Once upon a time, most people expected to have about 20 good years after retirement, if they were lucky. That made it fairly safe to spend the principal in their savings accounts.

Now it's not uncommon to meet healthy 90 and 100 year old retirees. It's much safer today to make the assumption that you have at least 30 and possibly 40 years that you'll need to support yourself post retirement.

Planning is important if you hope prosperous retirement. Use a free online financial calculator, which you can find on the Internet, to help figure out how much money you're going to need to retire.

How Long Have I Got?

Life expectancy grew rapidly in the 20th century. It went from 50 years to 80 years. This dramatic increase in life expectancy was a result of medical advances and the advent of healthier styles of living. Today it seems that life expectancy increases all the time.

Life insurance companies and some financial advisors use life expectancy tables are misleading as they're meant to be used with groups of people, not with individual life expectancy. If you factor in personal facts like what you do for a living, your lifestyle, your personality, and your family history, you can use a life expectancy chart to give you some idea as to what your lifespan might be. But the bottom line is that nobody really knows so you'd better plan your retirement so that you have money that will last a long time.

Family History

It's easy to make personal predictions upon how long you'll live depending on the lives of past family members. Don't you hear people claiming that their grandparents lived to be 100 so they will too? Well, they very well may. And when it comes to retirement planning, you should think the same way, no matter what your family history is. You can never have too much money. But you most certainly can have too little!

Remember that if you underestimate how long you live, you may leave yourself stranded financially right in the middle of your retirement. How can you prevent that scenario from occurring?

Planning with Longevity in Mind

Don't assume that you're going to have a short life. Be smart and assume that you're going to have a very long life and plan your retirement with that in mind. If you save too much money, you can leave it to your heirs. But if you don't save enough, you may find yourself floundering financially a few short years down the road.

If you accept that you may live in retirement for 30 or 40 years, it's important that you make up your mind to keep your hands off the principal in your savings. You really can't live off savings for 40 years, but you can life off the income of that savings. This is very critical when planning for a long time in retirement.

If your retirement is short, perhaps 20 years, you'll be able to spend some of your principal. But long retirements require a steady flow of income for up to 40 years.

You're also going to need to know the best investment strategies to help you protect your savings from inflation and still live a comfortable lifestyle. Even small rates of inflation can decimate a savings account over 40 years.

No Mortgage Bills

Get rid of that mortgage, if you can! This reduces expenses and gives you an important asset, not to mention a rent free place to live. A house that is not mortgaged can be sold or used as an asset from which to draw a reverse mortgage.

Should you live to be very old, you may find your savings account exhausted. However, you'll still have your home. And that home has probably gained plenty of value due to inflation while you've been living in it mortgage free. You could sell it or secure a reverse mortgage.

Enjoy Retirement

The long your life expectancy, the longer you can enjoy not getting up at the crack of dawn to go to work! You just have to remember to plan your retirement accordingly. Assume a long lifespan when planning your retirement and you'll enjoy those Golden Years in comfort and security! How long could my life possibly be after retirement? Should I live 30, or even 40 years after I retire, how much will I need to retire? These questions are all vital when you start to think about retirement plans.

About the Author:
Jason Munroe loves money! He teaches about money in his seminars about retirement planning and wealth building and enjoys spending it when traveling with his wife. He lives in Nevada with his wife and their two grown children where he also enjoys working on the Internet.