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2. You Underestimated Your Life Expectancy
Your retirement could easily be more expensive than you thought if you live a lot longer than you expected you would. About one in four 65-year-olds today will live past age 90, according to the Social Security Administration.
If you saved enough to cover expenses for 20 years in retirement but end up living for 30 years in retirement, you’ll have to find a way to stretch your savings for another 10 years.
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What to Do
Littell recommended using the life expectancy calculator at Livingto100.com to get an estimate of how long you will live based on your health and family history. To reduce the risk of outliving your savings, you shouldn’t rely on just one source of income in retirement.
You should also have a portfolio of diversified investments in a retirement account from which you can withdraw money over time. Additionally, you should take a balanced approach by having a source of lifetime income such as an annuity if you won’t have a pension, Littell recommended. Limit withdrawals to about four percent annually to ensure your nest egg lasts long enough.