Longevity in America is redefining retirement planning. A week doesn’t go by where we read about the growth of the centenarian population. That’s the good news…and the bad news.

Projections by Pew Research and other organizations suggest there will be 3.7 million centenarians across the globe by 2050. It’s one thing to plan to live in retirement for 20-30 years, but what about 30-40 years or more. That’s potentially more time spent in the “golden years” than you might have spent working. So how do you prepare to live in retirement regardless of the time span? It’s called purposeful planning!

Living longer begs the need for a shift in paradigm from “financial planning” to “life planning.” Traditional financial rules that suggest efficient strategies to create income in retirement from savings are as extinct as dinosaurs.

We still see and hear that the 4% distribution rule or the Rule of 100 are applicable to protect you during the distribution phase of your life, the retirement years. Those may have been appropriate for the parents of the baby boomers but I find them to be slippery slopes for several reasons such as: living longer means the potential for more out of pocket healthcare costs, potential for long term care needs due to debilitating illnesses that keep us alive longer, more inflation, more periods of market volatility, and costs needed to fund active lifestyles well into your 90s.

This is where the shift in mental models about retirement planning need to be made with anyone over 50 years old. Think about it, if your 50 years old today, and you think you want to work about 10 more years, have you projected the costs of your preferred lifestyle for an additional 50 years.

You’ll need to think about future value of your lifestyle taking into consideration the types of assets you have (tax deferred, tax free, taxable, etc), whether you have enough when you pay taxes, and consider skyrocketing healthcare costs, inflation, lost income for married couples, and most importantly unanticipated healthcare needs when you or your spouse/partner suffer a debilitating illness.

To be quite candid, my firm completes over 50 retirement planning analyses each month, and over 75% of those planning to retire in the next 5 years, or those already retired without a plan, will run out of money before they run out of life.

So, what do you do:

You create an integrated lifestyle plan – a life plan, not just the financial or investment plan. The plan should drive all financial solutions because planning to live beyond 90 or 100 is quite different than simply taking 4% out of your portfolio monthly to supplement your fixed income sources.

And it’s far greater than managing the level of risk in your plan.

In a nutshell, the life plan informs the creation of bucket strategies for the money management because you’ll need to rethink how you position your retirement nest egg to take you to and, for women in particular, through your more mature years of the 90s and 100s.

The following considerations should be addressed in your integrated life plan:

• A realistic picture of expenses at today’s value building in inflation, lifestyle transitions, lost income due to death of a spouse/partner, tax obligations, etc.
• The impact of healthcare expenses considering both unpaid medical costs to account for Medicare premium increases as well as cost shifting; long term care costs should you suffer a debilitating illness, and the impact to your estate if you don’t have protection for long term care, and your spouse/partner uses a large portion of the financial assets on funding their long term care.
• Costs associated with maintaining an active lifestyle through your 80’s, 90’s etc. You could still be traveling, maintaining your homes, golfing, buying cars through this life stage.
• Lifestyle transition costs if you feel it’s time to consider relocation to be closer to the kids and you move to a state with state income tax or you need to move into a life care community (Continuing Care Retirement Community).
• The impacts of taxes as you begin utilizing more and more of your tax deferred accounts, recognizing that using more IRA assets could potentially increase Medicare premiums, tax more of your Social Security income, or perhaps reduce the deductions you were once able to get.
• The impact of lost income if you are accustomed to living on two Social Security income streams and then one of you passes away. Or, you lose a pension or a portion of a pension annuity. What will replace that income and how will taxes be impacted? Lifestyle costs don’t necessarily decrease with the loss of your beloved spouse/partner as one might think – actually, with women it typically is increased expenses since women remain active much longer.
• A properly designed legacy plan that builds legally compliant estate protection documents like wills, trusts, powers of attorney for financial healthcare, living will or others as appropriate to your unique situation and also plans structured. Also, consideration given to the legacy you desire to leave to your family, favorite charity, etc.
• A tax efficient income distribution plan for your unique lifestyle goals. Not a one size fits all income plan but the appropriate buckets of financial assets that build in the appropriate level of risks and financial solutions to accomplish the goals of your life plan. This income plan needs to be tax efficient so strategic positioning in the buckets using appropriate and customized financial solutions that achieve the three most critical attributes of money: safety, liquidity, and growth.

Have you noticed I didn’t say anything about investing? Investments and all financial solutions are simply a means to an end. They are not the end but a way to achieve your desired lifestyle with greater certainty than an investment portfolio can provide you.

What is critical about the retirement journey is that it requires customization of financial solutions appropriate to your goals and not your favorite portfolio or favorite financial products.

So to achieve a high degree of retirement security and success you’ll need to consider a blend of financial solutions such as investment portfolios, life, health, long term care insurance solutions, the right annuity solutions, and perhaps other unique customized financial solutions specific to YOUR goals.

Gone are the days of taking advice from your father, mother, brother, sister, neighbor or co-worker.

The retirement planning journey could potentially be one of the most critical journey’s of your life and should be as unique as your DNA. Be prepared to join the ranks of the active 90, 100 year olds because I just might see you there!

Jeannette Bajalia, author of "Retirement Done Right" and "Wi$e Up, Women," is president and principal adviser of Petros Estate & Retirement Planning, where she has designed and implemented innovative estate-planning solutions for clients and their families. She also is founder and president of Woman’s Worth®, which specializes in the unique needs facing women as they plan for their retirement.