Jul 4, 2024
If you want to live to be 100 years old, you’ll need to take care of more than just your physical health — you’ll also need to take care of your financial health.
According to a survey by Corebridge Financial, 54% of Americans aspire to live to age 100. And the odds are increasingly in their favor. Since 1990, the number of centenarians in the U.S. has nearly tripled to 101,000, or 0.03% of the population, per an analysis of Census Bureau data by the Pew Research Center. By 2054, it’s expected there will be 422,000 people aged 100 or older.
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But will these centenarians outlive their retirement savings? Only 27% of respondents to the Corebridge Financial survey believe their savings will be enough to last their lifetime.
This isn’t surprising, since Northwestern Mutual’s Planning & Progress Study 2024 found that Americans expect they’ll need $1.46 million to retire comfortably — yet the average adult in the U.S. has only saved $88,400.
Why Americans are worried their retirement savings will run out
With a savings shortfall and concerns about inflation, taxes and Social Security, many Americans are fearful of what retirement could bring. Sixty-three percent of those surveyed by Allianz Life reported they’re more worried about running out of money than death. And 43% are concerned that high inflation will erode their retirement savings.
This is a legitimate concern: inflation can be crushing for retirees on a fixed income. If the inflation rate remains elevated for a long period of time, it may lead to settling for a lower standard of living or taking ever-larger withdrawals from your savings, drawing them down faster than planned.
About a quarter (24%) of respondents to the Allianz Life survey worry their retirement income won’t last because Social Security won’t provide as much as it should. Indeed, some financial experts are concerned that underfunding of the plan could lead to reductions in future benefits. And, because the plan is complicated, some retirees could experience clawbacks after they’ve started collecting benefits.
Social Security is also one of the retirement income streams that’s taxable, along with 401(k) withdrawals and several others — and this can take a bite out of your retirement income. Twenty-two percent of respondents to the Allianz Life survey are worried that high taxes could deplete their retirement savings faster than they’d like.
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How to make your retirement savings last a lifetime
A key factor in making your retirement savings last a lifetime is to save more. To find extra savings each month, create a budget and look for areas where you can cut back — or look for ways to increase your income, such as a side gig. And, if you’re aiming to live to 100, consider working longer and retiring later, which will shorten the amount of time your savings need to last and help you save more before you retire.
Consider working with a financial adviser to ensure your portfolio is optimized for your age, goals and risk tolerance. It may be possible to design your portfolio to better weather inflation. For instance, you might want to explore whether alternative assets such as real estate might be right for you. Or you might want to consider investing in a product such as an annuity, which will provide a consistent income stream.
Saving more will also help you reduce your dependence on Social Security. To get the most out of your benefit, familiarize yourself with the applicable rules and regulations. Consider also talking to a financial planner about the best time to apply in order to maximize your benefit.
To reduce your taxes in your golden years, consider saving in a Roth IRA, which provides tax-free distributions in retirement. A financial planner can help to develop a tax-planning strategy for your retirement income streams — so, with some careful planning, you can increase the chances that you won’t outlive your retirement savings.
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Vawn Himmelsbach is a veteran journalist who has been covering tech, business, finance and travel for the past three decades. Her work has been featured in publications such as The Globe and Mail, Toronto Star, National Post, Metro News, Canadian Geographic, Zoomer, CAA Magazine, Travelweek, Explore Magazine, Flare and Consumer Reports, to name a few.
