This week’s theme on the Retirement Quick Tips Podcast is: the single biggest threat to your retirement

Today, I’m talking about The Problem With Longevity Risk

Essentially living a long time and spending 25-30 years in retirement vs. only spending 10-15 years in retirement, means you're going to potentially spend down a lot more of your assets.  And since we don’t know our expiration date, it’s a big question mark, that not only is draining on your assets, but also impacts decisions you make about retirement. 

The real problem then with longevity risk, is that when you account for inflation and taxes, most people simply don’t have the assets to support themselves for a 30 year retirement, and if they live too long and spend down their assets, they run out of money before they run out of years.

So the first step in mitigating longevity risk is to not underestimate it’s effects on your money.  Underestimating how long you’ll live impacts decisions - just the SSI decision alone could cost over $500k of income you didn’t collect if you decide to take it at 62 vs. waiting longer and then you end up living to your life expectancy, you permanently reduced your income in retirement which means you also lowered your lifestyle or perhaps needlessly suffered, not being able to go on vacation or afford a plane ticket to see your grandkids, because you simply didn’t have enough money. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance