1. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    The life expectancy for sixty-five year old men and women has increased by more than ten percent since 2000. This finding has implications for everyone preparing for retirement. The obvious issue is that if you are already receiving a private pension now that the trustees of that pension are going to be under increased pressure. Returns on investments are quite low and now the time that payments will be required has increased substantially. If you are looking forward to retiring in the near future on a defined benefit pension plan the trustees will be doing what they can to reduce their liability.

    While this increase in life expectancy will affect private retirement plans, public pension plans and multi-company pension plans might be even more vulnerable. Some of these plans are not subject to the same sort of regulations and are even now facing a shortfall in funding.

    While this may seem like bad news this increased life expectancy also means that many people are reaching retirement age in better physical condition than in previous years. For many this will allow them to continue meaningful work past their normal retirement age. These extra years of work can work wonders if you delay starting Social Security Benefits and they have the same positive effect on any other retirement benefits that you can delay.

    If you are planning your retirement plan the effect of an increase in life expectancy means that you can change careers if you wish. I know a sixty-seven year old man who has recently started teaching in a local public school. There are a variety of interesting jobs. It is important to determine your interests and get the training to move into that field when your days working in your current job become less than rewarding.

    For people who have annuity contracts this could be a wonderful opportunity. As their life expectancy increases the payout on the annuity doesn’t change. The annuity could become an extremely important part of their retirement plan. If life expectancy continues to increase annuities purchased today could increase in value and utility.

    The increasing life expectancy may result in your retirement plan offering a lump sum payout. If you receive that offer you should consult with a Retirement Income Certified Professional. The alternatives presented seem to be based on the same data; however, there might be some reasons to select one option over another. This might be an opportunity to roll over the retirement plan into an IRA that is invested more aggressively. That aggressive IRA might make the difference when inflation raises its ugly head again.

    The key message to everyone concerned about increasing life expectancy and what it mean to their retirement plans is that each of us needs to Save more, spend less, invest wisely and, if possible, work longer. Some will spend as much time after age 65 as they do working and that requires planning to make sure that there is sufficient income to meet that increasing life expectancy.
    Answered on February 14, 2015
  2. 21750 POINTS
    Jim Winkler
    CEO/Owner, Winkler Financial Group, Houston, Texas
    That is an excellent question! And one that a whole bunch of people are asking. Unfortunately for many people it means that their retirement plans may not fund the retirement they'd envisioned. For some it means they will need to scale back expenditures more than they'd hoped. For others still it is a very scary thought, as medical expenses continue to rise, and benefits continue to be cut.
    For those still able to react to the situation, it means increasing the amount set aside for retirement, and investing in vehicles that can continue to pay out regardless of how long the retiree lives. It means looking more closely at what retirement looks like to you, cutting expenses, and maximizing income.It means a close eye on returns, and better planning.
    If you have concerns over your retirement plans, please consult with a trusted adviser, and look at where you currently stand, and what options are available to you. Thanks for asking!
    Answered on February 16, 2015
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