How to maximize retirement savings for longer lives
With life expectancy increasing, these strategies can help to ensure your retirement savings last.
With life expectancy increasing, these strategies can help to ensure your retirement savings last.
With life expectancy increasing, these strategies can help to ensure your retirement savings last.
An increase in life expectancy is bringing new challenges 鈥� and opportunities 鈥� for retirement planning.
"You have to be able to plan for retirement that will last for potentially 30 years," says Rita Assaf, vice president of retirement planning at Fidelity Investments. Assaf advises saving at least 10 times your final salary by age 67. For those retiring earlier, additional savings are necessary.
Assaf recommends covering essential expenses with guaranteed income sources like pensions, Social Security or annuities. Discretionary expenses, she says, should be funded through retirement savings or investment income, allowing flexibility. "If there is a market downturn or there's something unexpected, you can come back on that spending without cutting back on your day-to-day living expenses," says Assaf.
The rise of flexible and remote work has also shifted retirement planning. Fidelity鈥檚 research shows two-thirds of Americans prefer a phased retirement approach, combining part-time work or passion projects with traditional retirement.
"It's a way to increase income for essential expenses, but it's also a way to keep busy and pursue a passion that they may not have actually looked at during their normal working career," says Assaf.
For those starting late on saving for retirement, Assaf says there are strategies to help close the gap.
"After age 50, you are eligible for catch-up contributions of $1,000 in IRAs, and actually recently, through SECURE 2.0, if you're in a workplace plan such as a 401(k), you even have some super catch-up options," says Assaf.
Assaf emphasizes the importance of younger generations taking advantage of employer 401(k) matches to maximize savings. She also highlights how technology has made retirement planning more accessible than ever.
"You can use websites, apps. It's just a lot more approachable than it was," says Assaf.
Health care costs remain a major consideration. Assaf suggests using tax-advantaged health savings accounts to save pretax dollars for medical expenses, with funds rolling over annually to build savings for retirement.