Wednesday, Mar. 03, 2010

Get Serious About How Long You'll Live

Today's elder generation never expected to last this long. By living into their 80s en masse, the members of this demographic have upset all the mortality tables and crippled our pension system, which is partly why we're in such a mess. Well, guess what? You may live longer than you expect too. Getting a handle on your likely longevity is Job 1 when it comes to planning the rest of your life. Spend a few minutes at Assuming decent health and habits, you will be amazed to learn that someone in their 50s today can reasonably expect to live to near 100, a mark that many younger folks will easily surpass. This unprecedented longevity is a blessing, of course. But it's also a game changer in that you'll have to stretch out your assets over a longer period of time, which will give rise to longer careers, bridge jobs to retirement and an explosion in annuities and other products that guarantee income for life. Your greater longevity should also prompt you to lengthen the period you plan to take distributions from your IRA or 401(k). Calculations should be based on a 4% initial withdrawal that rises 3% (not 3 percentage points!) every year to adjust for inflation over 30 years starting at around age 70.