Life is getting longer, which is an incredible blessing. It means more time with friends and family, and more opportunities to do the things we love. However, our society isn’t structured to support long lives, as most people are encouraged to retire around their 60s and certainly by their 70s. This exposes people to longevity risk: the possibility of outliving their savings. Here are 7 strategies to live long and prosper.
1. Work That You Love
Retiring too early is one of the biggest mistakes we see. If you retire at 65, you could reasonably expect to live another 30-35 years. Yet, most people only have income to last them about two decades’ worth of retirement. Studies suggest that losing a sense of purpose can lead to a decline in both mental and physical health. Staying active and engaged keeps you young! It doesn’t mean working at the same pace as a 30-year-old, but finding meaningful ways to contribute can keep your mind sharp and your bank account healthy.
2. Anticipate Inflation
Another drawback to retiring too early is the impact of inflation on your fixed income. Money is always affected by inflation, but it’s more noticeable when you’re living on a declining balance. Many people retire with $1 million, thinking they’ll never run out of money. Yet, that’s only 10 years of $100,000 income. Consider how far $100,000 stretches today and think about 30 years from now. Inflation can drastically reduce your purchasing power, shrinking your savings much faster than anticipated. By working longer, you delay the need to live on a fixed income and give yourself more time to save.
3. Save More Now
This might seem obvious, but the more you save now, the better prepared you’ll be for the future. If you’re saving 10%, try for 20%. If you’re saving 20%, aim for 25% or even 30%. It’s even better if you can automate your savings. Making these changes now can build momentum, especially if you save into a whole life insurance policy, which grows steadily and securely. This provides you with a solid foundation and additional income benefits for retirement.
4. Expand Your Portfolio
And no, we don’t necessarily mean buying more stocks. Instead of focusing solely on paying down debt, think about leveraging your assets to build wealth. Look to proactively save taxes so that you keep more money in your pocket. Rather than funneling excess money into your mortgage, save it and use it to invest in more real estate. Consider moedling your portfolio off of the way endowments are created. This approach can increase your cash flow and savings, and reduce your volatility giving you a more robust financial cushion.
5. Control Your Money
Typical financial planners might steer you away from controlling your own money, preferring it in their hands or on Wall Street. While you might be comfortable handing over the reins, it’s not always in your best interest. When others control your money, they can take unnecessary risks, and you incur fees. By investing in assets you control, like bridge loans, real estate, oil and gas, peer lending, your own business, and annuities, you set your own parameters and manage your risks.
6. Invest in Your Health
Investing in your health isn’t just about living longer; it can also keep costs down as you age. Many people face significant health changes and expenses later in life, often when they’re on a fixed income. By investing in your health now, you improve your chances of maintaining good health and minimizing expenses later. What might seem like an expense now can be an investment that saves you from hefty medical bills in the future.
7. Make Your Life Insurance Multitask
Whole life insurance is the perfect multi-tasking tool. It provides a death benefit for your heirs and access to some of that benefit while you’re alive, in the form of cash value. You can use this cash value for emergencies, investments, or even just for fun. Whole life insurance policies also allow for riders, which are additional benefits that improve your coverage. One recommended rider is long-term care, enabling you to fund your care needs with your life insurance policy, saving money by bundling services.
Conclusion
By following these strategies, you can enjoy a long, prosperous life without the fear of outliving your savings. Stay active in work you love, anticipate inflation, save more, diversify your portfolio, control your money, invest in your health, and make your life insurance work for you. Embrace the possibility of living a long life with confidence and financial security.