You can't predict how long you'll live. Nonetheless, you still need to consider longevity as a key factor in creating, and following, a long-term investment strategy.
And your projected lifespan may be longer than you had thought. Men who turned 65 in 2010 can expect to live another 18.6 years, while women who reached 65 that same year can anticipate another 20.7 years, according to the 2011 Social Security Trustees Report. And these figures are just averages. Depending on your health and family history of longevity, you could well spend two, or even three, decades in retirement.
Possibly because people are now realizing they may have to support themselves for far longer than earlier generations did, they seem to be growing increasingly concerned about running out of money in their later years. In fact, in a poll of people ages 44 to 75, sponsored by Allianz Life Insurance, 61 percent said they fear depleting their assets more than they fear dying.
So, if you're concerned about outliving your resources — or if you think that you may become one of those people — what steps should you take, both now and during your retirement? Here are a few ideas:
Keep investing. Put away as much money as you can afford for your retirement. Take advantage of tax-deferred accounts, such as your 401(k) and traditional IRA, or tax-free accounts, such as a Roth IRA. (Roth IRA earnings are tax-free provided you've had your account at least five years and you don't start taking withdrawals until you're at least 59 1/2.) And keep investing, year in and year out, despite the inevitable market volatility you'll encounter along the way.
Reassess your retirement age. If you enjoy your work, you might consider staying at your job a few years later than originally intended. Those extra years of income, not to mention extra contributions to your 401(k) and potentially bigger Social Security payouts, can make a big difference to your retirement lifestyle.