In 1935, when the Social Security system was created, average life expectancy was 62 years. In 2013, it has increased to about 80 years. A longer life expectancy means people have a chance to enjoy their retirement years, but it is also something to keep in mind during financial planning for retirement. What if you outlive your money?
Social Security retirement benefits provide a small income for retirees, but most people want to be able to maintain a lifestyle similar to what they had when they were working, and that takes planning.Of course, one of the most important factors in successful retirement planning is to start saving early, and young people who take advantage of 401(k)s and other retirement accounts are doing their future selves a great favor. If, on the other hand, you are nearing retirement and realizing that you need to increase your savings, there are things you can do.
It is important to take advantage of Roth accounts and other retirement accounts as much as possible. Roth accounts are particularly helpful for retirement because of the tax break on withdrawals. High-income earners would be well-advised to make the maximum contributions and convert traditional accounts to Roth accounts during high earning years, when the income tax will be less of a burden.
Another useful strategy to consider is investing in tax-deferred annuities or life insurance policies such as whole life, which have a cash value component that grows tax-deferred. These investments also have death benefits that can help provide an income to survivors.