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Financial Planning for Your 80s: Things to Keep in Mind

One of the emerging problems in financial planning is longevity risk: the likelihood that a person could outlive their money.

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What issues should i consider before i retire?

Many of us have heard some variation of the story: a young, eager investment advisor is explaining the benefits of bonds to a client. As he excitedly talks about the advantages of locking in yields for a decade or more, the client, who is well advanced in years, gives him a sideways look. “Son,” he says to the advisor, “you’re talking about decades, and at my age, I don’t even buy green bananas!”

While there’s no question that someone in their 80s should probably not be investing like someone with many years until retirement, it’s also true that, as American lifespans continue to increase, 80-year-olds may have more years of retirement left to provide for than we might have assumed in previous times. In fact, one of the emerging problems in financial planning is longevity risk: the likelihood that a person could outlive their money. Where financial planners formerly considered that basing a client’s financial plan on the assumption that they would live to age 90 was a conservative parameter, more and more advisors are coming to the conclusion that plans should encompass lifespans of 100 years or even more. One Harvard researcher, for example, believes that the first person to live to be 150 years old may have already been born. While a 150th birthday party may not be in cards for you or me, it does make sense to assume that people are living longer than they used to, and their financial planning needs to take that fact into account.

Our previous article looked at financial planning issues for people in their 70s, but what are the implications for healthy, active 80-year-olds who want to maintain a sound financial plan for their future years? Let’s take a look at a few tips that can help you ensure that all your decades are funded for an enjoyable, secure retirement lifestyle.

  1. You never outgrow the need for some growth. The traditional rule of thumb is that the percentage of your portfolio allocated to equities (stocks) should equal 100 minus your age. That would mean that 80-year-olds should have 20% of their assets in equities. But there are reasons why that rule of thumb may be outdated. One factor is the longer life expectancies, already mentioned. Another is a heightened awareness of the impact of inflation on the purchasing power of the assets in your portfolio. Historically, equities have proven to be an effective hedge against inflation over the long term. You should consult carefully with your financial advisor to make sure that you have an appropriate balance of assets to provide both current income and growth for future years.
  1. Keep it simple. Even for 80-somethings who are well informed and on top of their investments, it’s a good idea to simplify your arrangements as much as possible. Over the years, people tend to acquire multiple banking accounts, IRAs, and even brokerage accounts. As you age, keeping track of everything can become a headache. It’s a good idea, instead, to centralize as much as possible, especially if you are working with a professional, fiduciary financial advisor who is familiar with your portfolio, your goals, your tolerance for risk, and your financial needs. You can maintain appropriate diversification of assets and still keep everything under a single umbrella, making your financial affairs much easier to manage.
  1. Get good help. And speaking of your financial advisor, one of the best ways to simplify your finances while exercising more efficient management is to get a trusted family member or friend more involved with your financial affairs. That doesn’t mean you’re turning everything over to them; it just means that, along with your trusted financial advisor, they are gaining familiarity with your needs and your wishes. They can also help you keep an eye out for any suspicious activity that might indicate someone attempting to prey on you financially. After all, elder financial abuse victimized more than 92,000 people in 2021, and from 2017 to 2021, fraud accounted for nearly $1.7 billion in losses to older Americans.
  1. Make sure everything is in order. By this time, you’ve probably got your will and other estate planning documents in pretty good shape. But part of good financial planning involves ensuring against the “what-ifs” as much as you can. Do the right people know where your important documents are and how to access them? Is your healthcare directive in place? If you have powers of attorney drafted, are they up to date? Obviously, the hope is that none of these will be needed any time soon, but having these matters handled and knowing all the necessary people are informed can give you peace of mind that will only add to your enjoyment of your retirement lifestyle.

At Milestone Money, we specialize in working with clients in and approaching retirement to develop personalized investment and financial plans that can help provide secure, satisfying retirement lifestyles in the 70s, 80s, 90s, and beyond. To learn more, visit our website to read our article, “Deciding the Best Age to Retire: A Comprehensive Guide.”

What issues should i consider before i retire?

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Life is full of financial milestones. We pay for college, we get married, we start businesses. But the most important financial decision we will ever make is when and how to retire. Milestone Money helps you map success to and through retirement.

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