112 • MARTIN H. RUBY
Not too appealing, I know. So, assuming you want to live a long and happy life, the best strategy is to plan like you’ll live to age ninety-five. Plan, Plan, Plan Planning is the only thing that can address your longevity risk. You have to make sure the assumptions in your retirement plan reflect the realities of your life expectancy. Because of this, I recommend that anyone under the age of sixty assume his or her retirement savings have to last until age ninety- five. What does that mean to you? I’m going to use some very sim- plified math here to make a point. Let’s say your plan is to accu- mulate $2 million by age sixty-five, when you want to retire. If you live until eighty-five, that money has to provide for 20 years. You could get a check for $100,000 a year without even earning any interest on your savings. Sounds good. Instead, let’s say you live to be ninety-five. Now, that same pool of money has to last thirty years. And you’re getting a check each year for $66,000. You’ve lost almost a third of your income. There’s no way to predict how long you will live. Even actuar- ies can only speak in generalities, not about you specifically (and you, specifically, are all that matters when it comes to saving). So plan for a long life. Make sure you are saving enough money to fund that long life. Retired Thirty Years . . . and Counting When Social Security was introduced in 1935, “retirement” was a very short phase of life. In 1940, only 60 percent of female work- ers even lived long enough to reach the retirement age of sixty- five. It was even lower for men. So Edna Mae might have retired at sixty-five, but only lived until seventy. She was only retired for five years before dying.
Made with FlippingBook - Online Brochure Maker