Our financial future depends on how much we prepare in the present situation. How much we put in today determines how big we can pull-out down the line when needed. If we save up just enough, we will have just enough to get by. Same goes for saving too little and too much, that attitude will yield either too little or too much at the time we need to use them.
Of course by nature, we would want to have a little extra and not live with a shoestring budget during retirement. Not having enough funds to retire on might even force you out of retirement and back to a 9-5 job just to pay for the living expenses. This is not something you would want to happen and something you must strive to prevent this from being a reality in your financial future.
As human beings, there is another factor that we need to consider that can greatly help us in planning for our future. It can help determine the amount of funds we would need to save up on and how long we need to save to achieve our goal. If taken in with a positive attitude, it can steer us in the right direction and actually help us plan better and wiser for the future.
Life expectancy in financial planning
Mortality is a fact of life. It is a destination everyone will get to sooner or later. And this is a reality that we are all familiar with. Life expectancy should be part of our own financial planning but only to improve it and not to justify lax and subpar attitude on planning for the future. It should inspire us and drive to us to do more.
In an article published by Business.financialpost.com, they reiterated that even the British government are counselling pensioners on life expectancy to give them a hand in managing their savings and financial future. This is an attitude we can adapt in the US for the benefit of managing finances and planning them wisely.
As reported by Statisticbrain.com, the average retirement age is at 62 and about 6,000 Americans turn 65 every day. But what is troubling is the fact that about 36% of the retirees did not prepare for life after employment. They do not have any savings that can help then in living a comfortable retirement period. Some of them even have some debts left to pay off.
There are ways to living a happy financial life and there are also smart ways to ensuring that you are able to carry this over your retirement. Here are some ways life expectancy should work for your financial benefit:
Plan positively
Planning for your future around life expectancy is better with positivity in mind. Plan for the long haul and you would end up with more than what you need. According to WHO.int.com, the life expectancy is at 70 years old in 2012. Practical people would plan until 70 years old. Pessimists would work on an even shorter time period. But the best thing to do is to plan as if we will until 90 years old.
The benefits of taking on this mentality is simple – the longer you plan ahead, the more you will have down the line. It gives you access to more than enough funds and enable you to live comfortably. One advantage of doing this is living a with minimal stress. It is very hard to think about financial future and how you are going to pay for bills and other living expenses when you are already retired. The stress will not do your health good and can even shorten your life expectancy than the global standards.
Start early
The earlier you start saving, the more you will a better financial future. Imagine having this attitude during college? What if you started saving during high school? What if you already have some savings tucked away during grade school? What if you had a piggy bank when you were young meant as a retirement fund? If you did not start at any of these stages, you need not worry because you can still start now.
If you already have kids, saving is a great family activity! You can lead the way and give every member of your family a piggy bank to work on. You can even set goals every week or month and have small prizes to give out especially to kids. This can motivate them and instill that attitude of saving up while they are young. If they carry this until they grow up, then they are going to have an easy and enjoyable retirement.
History
Being realistic and knowing the family background can help you prepare as well. It gives you a glimpse of what is hereditary in your line so you can prepare. If diabetes is dominant in your family tree, then you can work your lifestyle and plan your financial future around that disease. As most people say, prevention is better than cure so keeping a healthy lifestyle is should work wonders for you.
Keeping fit and healthy is an investment on its own. It may not quantify directly into dollar accounts in your bank account but it will help you get a quality way of life. Visit your doctor and have an annual check-up to be on top of your health and keep track of creeping problems you can address right away.
Inheritance
Keeping in mind how much you want to leave behind to your family is an important factor in knowing how much you want to save and acquire. If your long-term goal is to secure a house for your kids, then you must include this asset in your financial plans. If you are more inclined into investments and would want specific investment options left for the family, then planning your financial goals around this early on can benefit you and the receiver.
Forward planning and knowing what you want to leave behind would give you a goal to work on. It is always better to work on something with a specific target in mind. This puts more focus on your finances and can help you steer back in the right direction when you lose your footing and wander off the target.
States to retire on
Money.cnn.com recently released an article, based on Bankrate’s’ ranking, of the 10 best states to retire on. This could also play a critical part in planning your financial goals around retirement. If you already know the standard of living of the place you will eventually retire on, it gives your financial plan a more concrete number to target.
According to the survey, Mountain and the Midwestern states are on top of the list. South Dakota taking the top spot with Wyoming and Nebraska in the middle rounded up by Virginia as number 10 in the list. These places are frequented by retirees for a number of reasons that are practical and fits right into their financial future planning.
What most retirees look for are the following:
- Tax. State and local tax fees are on top of the list of retirees. This is crucial considering that they all live on fixed income. Their take home will mean a lot and dictate how they live their retirement years.
- Healthcare. Quality over quantity is what should matter to your when planning where to retire. This is also an integral part of your financial planning and should be considered right from the beginning. Ease of access to quality health care should also be looked into.
- Living cost. The standard of living should be less than or equal to your capacity to pay. If it is more than what you can afford, you will burn up your retirement fund sooner than you expected and problems will start to creep up.
- Crime rate. At this point, you would want to reside in a peaceful and quiet place. You want to have the freedom to walk the streets without the fear of getting mugged every night. Check the crime rate and the lower they are, the better the place to retire on.
Here is a video that explains some mistakes retirees make:
Life expectancy should be factored in when putting together your financial plans only if it will be beneficial to your objective. If factoring in this detail would make you work less than you should and take away your drive to strive harder, it is better to not think about life expectancy at all. Work with details that will work to your objective and not the other way around.