Your Financial Life at Age 90

March 2, 2010 by thinkhappy

I just read an article on CBS MoneyWatch discussing the average life spans of women and men. For women who are now in their 50's (like me) studies show the expected average age is 87. Keep in mind this is the average age; what if we live to be 90 or 95?

The big question is, can our savings and retirement money support us until then? In the article, Steve Vernon mentions a website:  Livingto100 which uses current medical and scientific data to build a life expectancy calculator. Based on the answers you give to 40 questions regarding your health and family history, the calculator will determine your life expectancy. The site will then provide personalized feedback and a “to-do list.“ Once you answer the questions and see what the future holds, it’s time to review your retirement plan.

How much do you have saved for retirement? What if you lived to be 90? Using the retirement calculator on Bankrate there are sample scenarios below that illustrate what your financial future would look like if you retired at age 65 and had to survive on your monthly taxable retirement plan income, (for example from a qualified IRA or 401k where the money is taxed when it’s withdrawn). This does not include any Social Security payments, nor does it take inflation into account:

Starting Age Contribution/Yr Retirement Yrs Rate of Return Tax% After-Tax Income
  25             $2000                  30                    6.00%             15%        $1644
  25               2000                  35                    6.00%             15%          1560
  30               2000                  35                    6.00%             15%          1124
  25               2400                  35                    6.00%             15%          1873
  30               2400                  35                    6.00%             15%          1348
  25               3000                  35                    6.00%             15%          2341
  40               3000                  35                    6.00%             15%            830

It’s wonderful to find out that the odds are you’ll live to age 85 or 90, but if you want to survive financially until then, or even better,live comfortably, the planning must start as early as possible with the maximum amount contributed per month. Obviously the assumptions made above use a fairly conservative rate of return on your investments (6%). But as we all have experienced, the market can go way up and way back down.

It is so important to have a retirement savings strategy and plan, particularly for women who may have fewer income earning years and fewer benefits. You can fool around with the Bankrate calculator and input various assumptions to come up with your own financial action plan.

Many employers now offer a 401k plan, and several news articles have stated that a good percentage of these companies are going to start or reinstate matching contributions up to a certain portion of your pay. Do whatever you can to take advantage of this opportunity, since having a match is like having free money. There’s a good chance you will need it way down the road.

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