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The Classic Retirement Oversight

Last update on: Feb 02 2017
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There are two big mistakes many people make in their retirement (or post-career) planning. One is to underestimate inflation and its effects during your silver years. The other mistake is to underestimate life expectancy, or longevity. For example:

A Society of Actuaries survey in 2005 found two-thirds of retirees underestimate the average life expectancy at their age, with 42 percent doing so by five years or more. The Social Security website has a life expectancy calculator and other tools for estimating government retirement benefits.

Longevity increased considerably during the last half of the 20th century. While most forecasters expect that to continue, there is a qualification to the forecasts, and that is the increase in obesity. The improvements in longevity from reduced smoking and from cancer deaths could be offset by diseases due to obesity. But if you avoid that problem, living longer is likely to result in higher medical expenses, especially for long-term care.

In any case, there is a good chance that even as Americans live longer lives, they will spend more years disabled, needing expensive care. That’s already happening: Though deaths from heart ailments or cancer have declined, deaths from Alzheimer’s disease have increased, from 49,558 in 2000 to 74,632 in 2007, according to the CDC. “The longer you live, the higher the risk” for Alzheimer’s, Besdine says, noting the disease has no good treatments. “What we want to do is extend the nondisabled part of old age.”

This is an interesting article on longevity, its many sides, and planning steps you need to consider: save more, buy annuities, and delay Social Security.

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