Planning for a ‘long retirement’ may be prudent: financial planner

Retirement expert Steve Vernon shares how a long retirement — and maybe a reverse mortgage — could factor into the later life plans of seniors in a new column at Forbes

As an exercise he described as “fun,” financial planner and former actuary Steve Vernon estimated how long he might live, and how those calculations factor into his retirement plans. He used a variety of different online “life expectancy calculators” based on health and lifestyle information, which he said gave a variety of results.

“It was also very enlightening and sobering, even for someone who works researches and writes about longevity topics,” he said in one recent Forbes column. “It reinforced the conclusion that I should be planning for a long retirement, as should most people who are currently transitioning into retirement.”

Retirement educators and financial planners have been saying for years that longer life expectancies and the need to have financial assets and stability last longer than they used to should be key considerations in modern retirement planning. 

“From the perspective of this 70-year-old, it seems that I could live another 20 to 30 years,” Vernon said. “The range of possible results demonstrates that I should plan to be financially secure no matter how long I live. It’s sobering to realize that a lot can happen in the world and in my community over such a long period.”

In another recent Forbes column, Vernon expounded on the realities that come with a longer retirement and how someone can prepare for it.

“The broad view of longevity risk involves considering everything that can go wrong during a long retirement,” he said. “It includes managing your health care expenses, preparing for a period of frailty near the end of your life, and planning for unexpected house and car repairs that are inevitable over the course of a few decades.”

Creating a degree of longevity to retirement funding has been an often-cited selling point of a reverse mortgage product, but older people are often concerned about how economic factors like inflation and living costs will impact retirement.

If someone doesn’t understand how long retirement can last, they could run out of resources too quickly, according to research shared earlier this year by the Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA).

Vernon previously expressed for RMD that while he is not a product proponent, the responsible use of a reverse mortgage could factor into the extension of financial resources in retirement. He re-emphasized that point in a May column.

“[A] tenure payment from a reverse mortgage […] can deliver a fixed monthly income,” Vernon said in May. “Another possibility is to use a line-of-credit reverse mortgage to draw upon when the stock market is down, leaving invested assets time to bounce back.”

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