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5 Tips to Make Your Money Last a Lifetime

Chances are good you'll live longer than you think. Plan accordingly

close up of hands holding a piggy bank protectively close to the chest

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En español | How many more years are you going to live? It's not an idle question. Twenty-eight percent of Americans 50 and older underestimate their life expectancy by five years or more, according to a recent study by the Society of Actuaries. This finding was even more pronounced among women; nearly a third significantly miscalculate their life expectancy.

You could argue that this is a good thing — so many more grandchild hugs! But operating under a misconception about how many years you have ahead of you has one potentially huge downside: You could run out of money. Money managers say pessimistic assumptions about your longevity can be one of the biggest money mistakes you make, leading you to sock away too little each month in your 401(k) or to choose to retire before you're financially stable. “Your life expectancy is the foundation of your planning,” says Chris Heye, CEO of Whealthcare Planning.

Finding the right target

There have been lots of headlines in recent years regarding decreasing life expectancies in the U.S. due to COVID-19 and other societal issues. But these reports don't pertain to your specific situation; they're averages for the entire population. In general, the older you become, the greater the likelihood that you'll reach your 90s.

To get a fresh, relatively objective sense of your longevity, there are any number of tools available. Search online for “life-expectancy calculator” and you can get an estimate from several organizations, each based on slightly different algorithms. Some require answers to only a few questions; others take a deep dive into your eating habits, medical history and other matters.

Whatever number you end up with, financial planners — such as Donald D. Duncan of Savant Wealth Management in Chicago — recommend adding a few years to it to account for the wild card: medical advances that could keep you going even longer. “I have a lot of clients with financial plans that don't terminate until age 100,” he notes.


Many happy returns

If you're just now turning 55, these are the probabilities that you'll celebrate other milestone birthdays.

Age Men Women
75  71% 81%
80 57% 69%
85 40% 53%
90 21% 33%

Adjusting your plan

Once you have a better estimate of your remaining years, you can tweak your money plan for a longer life.

1. Start saving to go the distance.

Use one or more retirement-income calculators to estimate if you're on track, based on factors such as your new longevity expectations, how much you've saved so far, your expected Social Security benefit and other guaranteed income, and your spending. Ameriprise, Fidelity, NerdWallet, T. Rowe Price and Vanguard all have good web-based tools; just search online for the company name and “retirement-income calculator.” If your projections come up short, look for efficient ways to save more. Workers should generally turn first to their employer's 401(k) or 403(b) plan; these make it easy to contribute pretax dollars. Your employer may match a portion of your contribution, too, boosting savings even more.

Plus, take advantage of catch-up contributions, which let workers 50 and older contribute additional sums to their retirement accounts. This year, for instance, you can shovel an extra $6,500 into your 401(k) plan, beyond the standard $19,500 limit; you can bump another $1,000 more than the standard $6,000 limit into a traditional or Roth IRA.

2. Look for ways to cut back.

For many older Americans, that translates into giving your family more of your time, not more of your money. In a recent CreditCards.com poll, nearly 80 percent of parents who helped their adult kids financially during the pandemic said they gave money that they would have otherwise used to improve their own financial situation — to pay off debt, for example, or to save for emergencies and retirement. The average gift was $4,154. That's in line with other surveys, such as one by Bankrate that found that half of parents put their retirement savings on a back burner in order to help adult children.

3. Plan for health costs.

If your employer offers a health savings account with a high-deductible health insurance plan, consider enrolling in it. You can save pretax dollars that grow tax free. Even better, when you withdraw the money to pay for qualified medical expenses, you owe no taxes.

Plus, check if you're entitled to wellness benefits such as a subsidy for a gym membership. A few hours every week practicing yoga or lifting weights could save you a bundle in the future — and give you a better, more active retirement. Remember: Unexpected medical costs are one of the top financial challenges of retirement.


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4. Touch up your LinkedIn profile.

Planning for a longer life may mean working longer — but it could also prompt you to find a new job that pays better and keeps you more engaged. Networking, both online and off-line, and keeping your skills fresh will help you stay on top of opportunities. In addition, they may protect you from being laid off in your late 50s or early 60s, points out Scott Kahan, president of Financial Asset Management Corp. in Chappaqua, New York.

Another option is to explore a side gig, whether that's consulting, driving for a ride-hailing service or working at a golf course every other weekend. This work could bring in enough extra savings to put your plan on track and could even turn into an eventual retirement job.

5. Don't invest too conservatively.

In a recent survey by asset manager Schroders, 49 percent of people ages 45 to 67 didn't know how their retirement savings were invested. Respondents ages 45 to 59 who did know reported that only 30 percent of their money was in stocks and that nearly the same amount sat in cash. To build a retirement kitty, your returns need to outpace inflation; that generally means investing a larger portion of your money in stocks.

An old rule of thumb was to subtract your age from 100 to find out what percentage of your money should be in stocks. Today many planners suggest subtracting your age from 120 to ensure you have enough to cover a longer life expectancy. If you are 55, that would mean keeping 65 percent of your retirement savings in stock. But it's important to look at your individual situation. If you have other sources of income, such as a pension or rental income, you may be able to keep less savings in stocks and still be secure for life.

Karen Cheney is a veteran personal finance journalist whose work has appeared in Money, Real Simple and other publications.