Make Your Retirement Money Last

Properly assessing your investment time horizon, or the length of time you need your retirement money to last, is a critical component of retirement investing.

In our experience, too many people drastically underestimate how long they’ll need their money to last in retirement. This means their savings could run short, making it difficult to pay for day-to-day expenses or to afford travel, entertainment or dining out.

Fortunately, planning ahead for a longer-than-expected retirement can make budget shortfalls in retirement less likely to occur.


Assessing Time Horizon as Part of Your Retirement Plan

Calculate Potential Income and Expenses

Fisher Investments believes it is wise to have a retirement plan in place well before you start to withdraw money from your IRA, 401(k) or other retirement or savings account. Your retirement plan should support your full financial picture. It should assess potential income from retirement accounts, Social Security, pensions, savings accounts and annuities.

Your plan should also account for ongoing expenses such as non-discretionary (e.g., mortgages and credit cards) and discretionary (e.g., travel or dining out) spending.

To be successful, we believe you should design your plan to give you the highest probability of reaching your long-term financial objectives over the course of your time horizon after you retire.


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The definitive guide to retirement income.

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Do you know how much your retirement will cost? Do you know how to generate the retirement income you’ll need? Definitive Guide to Retirement Income can help you find answers to these and other important questions.



Statistics on How Long You May Need Your Retirement Money to Last

While life expectancy projections can help determine your time horizon and how long you may need your retirement savings to last, life expectancy is a moving target because the longer you live, the longer you are expected to live.

According to the US Social Security Administration, a 65-year-old is expected to live to about 83, while an 83-year-old is expected to live to 90. This means if you reach 83, you may need to be financially prepared to fund your retirement for another 7 years beyond that, or more.1

Here’s another way of looking at this: If you were to retire and began drawing from your retirement assets as soon as you were able to legally tap tax-deferred retirement assets without penalty (age 59½), you would need retirement income, on average, for over two decades. If you need to plan for a spouse or partner as well, you may need income for even longer.


Higher Earners Likely Live Even Longer

According to a 2016 study by the Brookings Institution, the life expectancies of higher earners have grown significantly more than the life expectancies of lower earners. Why? Higher earners tend to benefit from a lifetime of better access to nutritious foods, health care and information about health-related topics.2

As the Brookings study noted:

The average life expectancy of a man born in 1940 in the top 10 percent of the mid-career income distribution is 88 years. The same man in the bottom 10 percent of the distribution has an average life expectancy 12 years lower.

So, if you are a high net worth investor, the Brookings Institution study suggests you are more likely to live longer than the average.


Prepare Now So Your Retirement Money Lasts

While you may be inclined to disregard life expectancy statistics because you assume you’ll live roughly as long as your parents or grandparents did, keep in mind that medical and nutritional advances, as well as your own health, can affect your lifespan. Remember, too, that life expectancy statistics are averages. About half of the US population will live longer—or not as long—as the reports indicate.

Nevertheless, many people live longer than the average. That’s why it’s important to consider whether your portfolio is designed to meet your needs in retirement. Will you have sufficient retirement savings if you live a long life? Will you be able to reach your long-term financial goals? How much might you need to rely on Social Security?

Planning for a longer retirement investment time horizon can help you feel more confident that you’ll be able to live the life you want in retirement.



1 US Social Security Administration – Period Life Table, 2021. Life expectancy rounded to the nearest year.

2 Barry P. Bosworth, Gary Burtless, and Kan Zhang. Brookings Institute. “What growing life expectancy gaps mean for the promise of Social Security.” February 12, 2016. https://www.brookings.edu/research/what-growing-life-expectancy-gaps-mean-for-the-promise-of-social-security/


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