Living to 100: Factors to Consider When Planning for Retirement

Could You Live to be 100 Years Old?
by Mark Kenney, CFP®, CTS™, Financial Advisor

The word “centenarian: refers to a person who is 100 years old or more. Bob Hope, Kirk Douglas, and George Burns were all centenarians. According to a Pew Research Center analysis of U.S. Census Bureau data, by 2054, there will be an estimated 422,000 Americans age 100 and older — more than four times the 101,000 in 2024. [1]  

Most people don’t consider the possibility of living to 100 in their retirement planning. While a long life certainly has its positives, it doesn’t come cheap. People who live longer pay more in living, medical, and healthcare expenses and have a greater chance of needing long-term care. They also have a higher risk of experiencing major stock market corrections, recessions, and more. Most financial advisors recommend creating a financial plan based on living till age 90. However, there are compelling reasons to plan for 100 which include:

• Prevent financial burden on family members.
• Minimize the demand on family for logistical support.
• Live independently for as long as possible.
• Have enough money to sustain a comfortable life.

Financial planning to age 100 from retirement at 65 means 35 years of living off savings and Social Security. Investors should anticipate spending about 80% of their working income in retirement.[2] According to the census, the nation’s median household income is $74,580, so the typical family needs about $60,000 annually in retirement money. [3]   This is a $2.1 million retirement budget over 35 years, for those who retire at 65, but the average American retires at 62. For most Americans, this math poses a problem. “Millions of Americans are at risk of outliving their savings,” said Catherine Collinson, CEO of the Transamerica Center for Retirement Studies.[4] 

There are things investors can and should do if they cannot sustain a comfortable retirement for 30 years or more.

• Wait longer to retire or maintain a part-time job — Retiring early may be necessary for some. Still, for those who can delay and feel they don’t have enough savings, it is best to wait as long as possible to retire or maintain a part-time job in retirement. 
• Delay collecting Social Security benefits — For those born between 1943 and 1954, the full retirement age is 66, and for those born after 1960, it’s 67. Benefits increase by roughly 8% for each year beyond full retirement age. The maximum benefit age for Social Security is 70 in 2024. 
• Hold cash reserves in an easily accessible interest-bearing bank account or money market fund — These types of accounts not only offer liquidity for easy cash access, they earn better returns, than traditional savings accounts. The interest accrued in these accounts adds to retirement income.
• Follow a budget — It may seem obvious, but individuals who live below their means and adhere to a budget have a much better chance of preserving and extending their wealth.

Not everyone wants to live to 100, but it’s a good idea to plan for it to the best of your ability. SHP Financial can help you employ strategies to make your money last as long as possible. Click here for a complimentary review of your finances today. 

Sources:

[1]https://www.pewresearch.org/short-reads/2024/01/09/us-centenarian-population-is-projected-to-quadruple-over-the-next-30-years/

[2]https://www.usatoday.com/story/money/2024/03/31/americans-live-to-100-retirement-cost/73143871007/

[3]https://www.census.gov/library/publications/2023/demo/p60-279.html

To learn about strategies to help make your money last as long as you do, contact us at ask@shpne.com.