How to ensure Retirement Savings last your lifetime

by | Jun 28, 2017 | Retirement Planning

Medical advances and better awareness of nutrition and fitness are helping us all to live longer, healthier lives. This is, indeed, great news. But comes with an important caveat: Longevity has become the biggest risk when you are planning for retirement.

So, how do you manage this longevity risk and ensure you do not outlive what you saved for retirement?

That, indeed, is a million-dollar question, sure to be on minds of many. While the best recommendation is to seek professional advice, here are three ways that could help.

1.  Have a realistic expectation of how long you might live

Recently, I was talking to a 50-year-old friend about retirement planning. I asked her how long she expects to live. She was so ready with the answer: 85.6 years. When I followed up how she knew so precisely, she said 85.6 is her life expectancy according to this calculator from the Social Security website.

Here is what is wrong with the expectation. The calculator gave her an “average” life expectancy for a 50-year-old female, not a realistic expectation of how long my friend might actually live. Put it another way, if my friend planned her retirement funds based on these expectancy numbers, she has a 50% probability to outlive her savings. Not a financially secure way to plan for retirement!

So, what are the alternatives? Here are a couple of options.

One option is to make your best judgment of your life expectancy projection based on your health, family history, etc. After all, no one knows your situation better than yourself! Otherwise, use tools such as the livingto100 calculator, which takes your ethnicity, family history, health habits, etc., into consideration and generates a more customized life expectancy for you.

2.   Maximize Social Security benefits

If you anticipate an extended retirement period and are afraid you could outlive what you saved, the best way to protect is: 1) to have income sources that last for however long you live, 2) to ensure the income source is protected against inflation.

Social Security as a retirement income source fits this paradigm perfectly – the benefits are for life for you and your surviving spouse, and the benefits are adjusted for inflation each year.

On top of this, Social Security offers you a way to increase your payout 8% each year you postpone drawing benefits. For example, if your full retirement age (aka FRA) is 67, and you postpone drawing benefits until 70, you have a guaranteed increase of 24% of your benefits. Yes, permanently – for the rest of your life – for however long you live! Moreover, if you die, your surviving spouse is eligible to receive the increased benefit as well – for her or his life.

So, putting aside the concerns that the system could go under, if your focus is to hedge against longevity, maximizing Social Security is an excellent way to do it.

3.   Consider gradually phasing into retirement

Retirement planning in the 21st century is not an all-or-nothing proposition. If you expect to live till 100, and if you fully retire at 65, you’d end up having 35 years of retirement! That is a long period of spending while not earning. Not ideal for your financial wellbeing or your personal well-being!

So, here is something to consider: Phase into retirement gradually. In other words, do not turn on the full-stop retirement switch yet. See if you can scale back and work fewer hours in your current job. Alternatively, consider working part-time at a lower-stress job. Or pick up consulting work. Or be your own boss and start a business, as I did in my late 40s.

So, what do you think? Does this make sense? Are you ready to face the modern-day retirement planning challenges? If so, hope this article gave you some food for thought. For a customized solution, please consult with your financial adviser. Good luck!


About the Author

Vid Ponnapalli

Vid Ponnapalli is a Fee-Only financial planner, and owner of Unique Financial Advisors located in Holmdel, NJ. Vid provides customized financial planning, investment management, and tax services for busy professionals. Vid serves clients locally, and across the country as a fiduciary and never earns a commission of any kind.


About Our Firm

Unique Financial Advisors is a Fiduciary Financial Planning firm located in Holmdel, New Jersey serving clients locally, and across the country.

We provide customized Financial planning, Investment Management, and Tax services for Busy Professionals.











732 615 0380

Our Address

999 Palmer Avenue, Suite 5
Holmdel, NJ 07733

Fee-Only Financial Advisor

All written content on this site is for information purposes only. Opinions expressed herein are solely those of UNIQUE FINANCIAL ADVISORS LLC, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.

Like what you are reading?

Share this post with your friends!