As Americans live longer, it becomes increasingly important to save for retirement that will last those many years. Yahoo Finance contributor Ross Mac shares his five top financial tips to help you prepare for longevity.
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video transcript
According to the CDC.
As of 2022, the average life expectancy of Americans was 77.5 years.
This is the first increase in about four years since 1980.
So, now that Americans are living longer, what steps can we take to financially plan for longevity?
Yahoo, Financial Contributor Ross Mack has more.
Okay, everyone, this is economist Ross Mack. Look at life expectancy increasing.
So, is it important to plan your finances for your long-term future?
Longer lifespans mean your retirement savings need to last much longer than before.
So, friends, we have to change the way we approach saving and investing.
So here are some things to consider and steps you can take to ensure your retirement funds never run out. First of all, you want people to actually re-evaluate their retirement age, for example, right?
The average lifespan of a healthy woman is approximately 80 years.
So you have to ask yourself. Do you have enough retirement savings to actually live until you’re 80?
That’s another one, right?
What are your annual expenses with the Fire Rule, which represents financial independence and early retirement?
To feel comfortable, you’ll want to save about 25 times your annual expenses for retirement.
Now, look at the third one. I would like to diversify my portfolio.
You want a mix of safer and higher-yielding assets that balance risk and required return.
And, folks, it’s important to note that as you get older, you’ll want to shift your investment mix to safer investments.
Folks, as you get older, your risk tolerance decreases simply because you don’t want volatile returns in your portfolio.
Fourth, you want to make use of your retirement benefits, right?
Try your best to maximize these contributions and 4 1Ks and a rough ira.
Now, the biggest tip that I always recommend is to make sure you get the most out of your employer contributions.
And finally, number five, another thing to consider is that we’re living longer.
guess what?
It also means higher medical costs.
Therefore, you may want to consider investing in a Health Savings Account, an HS A account, which offers tax benefits to cover your medical expenses during retirement.
I hope this helps you prepare for a long life.