We've all read various life expectancy statistics. People born today can expect, on average, to live to about 77, give or take a few years, depending on gender, race, and so on. Those who are 65 today can expect to live between 10 and 15 more years, depending on lots of factors. These numbers are extremely relevant when you think about your retirement planning. After all, the money you sock away for your golden years needs to last through all of them. (Let us help you reach your goals -- take advantage of a free trial of our Rule Your Retirement newsletter.)
There's a danger in relying too much on these life expectancy numbers, though. That's because they're just averages, just estimates. In a similar vein, it's dangerous to rely too much on the fact that over the past century, the stock market has returned, on average, about 10% per year. That may be true, but it's probably not what you're going to earn during your investment period, which may be 12 years or 52 years. You may well earn an average of 8% or 13% -- due to the fact that the market doesn't go up in a straight line and due to the performance of any individual stocks or managed mutual funds you invest in. (Looking for funds? Looking for a dozen promising stocks?)
But back to your life span. The average 65-year-old can hope to reach 80, but remember -- that's just average. Many, tragically, won't get there. But many others will -- in fact, some will hit milestones much further out. Consider, for example, Fred Hale, Sr., who died in mid-November outside Syracuse, N.Y. Probably surprising himself, Mr. Hale lived to the age of 113. He lived long enough to see his favorite baseball team, the Boston Red Sox, win the World Series twice. He was born just a few years after the invention of the flagship beverage of the Coca-Cola (NYSE:KO) company, and a year after the invention of basketball. Television, microwaves, supersonic jets? Feh -- Hale was born before the invention of radio! You get the point -- he lived a long, long time.
An extra long life can be mostly good, if you have a reliable pension, as Mr. Hale probably did, having worked as a railroad postal worker. But traditional pensions have gone the way of the saber-toothed tiger in recent years. Even Social Security is in jeopardy. If you follow conventional wisdom and park much of your money in low-return, "safe" investments when you near retirement, you may run out of money too soon. It takes a lot of savings to get you through age 80 -- it will take much more to get you through 100.
All is not lost, though. It's rarely too late to take effective steps. Learn more in our Retirement area, and consider trying our retirement newsletter for free. We can help you get your financial house in order. And if the thought of taking control of something as critical as retirement on your own is daunting, seek the help of a financial advisor. Choose carefully, though (we offer some tips), and perhaps try our well-regarded TMF Money Advisor service, too.
You can ask questions and get answers on our Retirement Investing discussion board, too -- or at least see what other Fools are saying.
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Longtime Fool contributor Selena Maranjian owns shares of Coca-Cola.
