In a recent survey conducted by Financial Engines, 61% of those who took the survey underestimated average life expectancy by 5 years. The tool showed that the average non-smoking 65 year old has a 42% chance of living to age 90 and a 22% chance of living to age 95. Most retirees that I meet are shocked that I use age 90 for life expectancy in my planning. They do not feel that they will live that long, but what if they are wrong? Along with not estimating life expectancy correctly, many retirees underestimate their living expenses in retirement.
One solution is an extensive budget. We have put together an expense summary that includes many items most people do not think of when making a budget, but year after year on which you spend money.. If you would like a copy of this expense summary please email me at: firstname.lastname@example.org.
Think about the life you hope to lead in retirement. Will you stay in your current home? How will you spend your time? What legacy do you wish to leave?
Face this fear and plan for it.