This past week I went through a refresher program about retirement planning. The surprising thing about it? They recommended that individuals plan to have their money last until they are 100 years old. People are living longer and longer. In fact children alive right now are expected to have a 1 in 3 chance of making it to 100. Though the odds are less if you’re 65, it’s not that much less.
It’s a startling number really. The average person retires at age 62 now, which means their retirement savings will have to last 38 years if they make it to 100. Yet I continue to talk to people who tell me “I’m 55 now, I’m retiring soon and so I need to start getting more conservative with my investments”. More conservative with investments that may need to last you 40 years? Not very conservative, especially considering that 10 year government bonds yield under 2% and are not even keeping up with inflation.
I am not recommending a 100% investment in growth stocks or something. But we need a significant growth component to our retirement savings. If we don’t take this seriously, we’ll burn through our savings and be living on just Social Security for way too long. Living to 100 seems like a fantasy, but it’s becoming a reality for many. That‘s the good news (long life) and the bad news (paying for it).