Longer Life Expectancy Increases the Need for Retirement Savings to Last Longer - rbj.net
The average life expectancy in the United States has grown from age 61 in 1935, when Social Security was first created, to age 79 today. At that time, women were expected to live until 64, and men until 58. Someone who is 67 years old today has a life expectancy of 84.8 years for a man and 87.2 years for a woman, so your retirement funds must now last longer than before. With pensions fading, employees are now being made responsible for their own retirement savings.
Social Security was never meant to be your only source of income in your retirement, but it is a very important part of it. If you expect to have a long life expectancy, you may want to consider delaying the start of your Social Security benefits if you are still working and can afford to. Your Social Security benefit grows 76% between ages 62 and 70, which is a substantial increase. Between the year you reach full retirement age and the year you reach age 70, your benefit grows at the rate of 8% per year. If your FRA is 67, that is a 24% increase.
You should also aim to retire as debt-free as possible. Most people dream of their retirement, and starting to save early in their career can help achieve that dream. For more thoughts on retirement financing, check out this rbj.net article by Caurie Putman.
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