Tuesday, February 06, 2007

How long will I live?

I need to get back to my retirement planning. There are two scenarios:

  1. You have way too much money compared to your living needs and really need to focus more on estate planning than conserving money for retirement expenses.
  2. You anticipate a potential shortfall of money in retirement and need to plan your budget accordingly.

For the former case, all I can say is thatI wish I had that problem.

Ther latter is my own personal situation.

In fact, right now I am assuming that at least a minimal level of part-term work will be required for me to make ends meet and to live in a semi-reasonably comfortable lifestyle.

The top task I have right now is deciding how long I expect to live. Given that I am in Scenario #2, it is a question of how much money I burn through each year, and hence, how quickly my initial retirement nestegg will be completely depleted. Some amount of part-time work could significantly extend my retirement budgetary coverage.

There is no question that you should expect to live past 90. Sure, many of us won't, but for planning purposes, plan on living at least that long.

Planning to live until age 95 also seems reasonable given advances in medicine, technology, nutrition, and health care.

I don't think it is too much of a stretch for those of us who are 50 today to expect until 2055, or another 50 years.

Going out beyond 100 years of age seems a bit overly optimistic, to me.

Nonetheless, since I want to be very conservative in my planning, I am thinking that I will assume that I will live to the age of 110. I was thinking of using 105, but I simply decided to go for it.

One nice benefit of using a life expectancy of 110 years is that it lets me feel good about the fact that I have more than half of my life in front of me. I am 52 now.

So, that is my tentative decision: I expect that my life expectancy is likely to be 110 years.

The next question I think I need to address is part-time work. Should I delay retirement, say until age 70 or 72 or even 75 with the expectation of not working in retirement, or should I retire earlier at 65 or even 62 with an expectation of a fair amount of part-time work? Good question to ponder.

-- Jack Krupansky

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