Tags: Edelman | life | span | retirement

Ric Edelman: Start Accounting for Longer Life Span in Your Retirement Planning

By    |   Friday, 05 June 2015 10:00 AM

You're probably well aware that the average life expectancy in this country is going up and up — now it's 79. That's good news and bad news.

The good news is you have many more years to watch your favorite TV shows and do what you love. The bad news is that your retirement planning just got a little — perhaps a lot — more complicated.

"The first person to reach age 150 has already been born. How do I talk to a client preparing to retire at 65 using the traditional model and with planning software that only goes to age 95?" Ric Edelman, chairman and CEO Edelman Financial Services, tells CNBC.

"The financial model is broken."

He has an interesting take on how life cycles will change. "It's not going to be birth, school, job, retirement, death," Edelman said. Instead people will constantly flow back and forth between work, school and sabbaticals, he maintains.

Meanwhile, Rodney Brooks, in his last effort as retirement columnist for USA Today, offers several tips for your golden years.
  • Wait until you're 70 to claim Social Security if you can afford it. "For every year you wait after age 62, your benefits increase by about 8 percent," Brooks writes. "Even if you wait only until 67, there's a big difference. You increase benefits by about 30 percent from what you would have received at 62."
  • "Don't be afraid of the stock market." Remember that stocks historically return about 9 percent a year, compared to 5 percent for bonds. You may need that additional return to finance your lifestyle and health needs in retirement. "Consider this: $10,000 invested in stocks 20 years ago would have been worth $65,484 at the end 2014. The same amount invested in government bonds would have brought you $31,058," Brooks explains. "Enough said."
Unfortunately, many studies show we're financially unprepared for retirement. So what's preventing us from preparing better?

A "big one is certainly the illusion of time," Scott Thoma, investment strategist for Edward Jones, told Fox Business Network. In other words, we think we have more time than we actually do to build a retirement kitty.

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You're probably well aware that the average life expectancy in this country is going up and up — now it's 79. That's good news and bad news.
Edelman, life, span, retirement
Friday, 05 June 2015 10:00 AM
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