First Person: We’re Afraid of Living Too Long in Retirement

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As members of Generation X in our early 40s, my husband and I feel as though the Great Recession will haunt us into retirement. In fact, we are scared that we will live too long. It's pretty clear our retirement money will run out if we each live beyond age 80. But what's even more troubling for us and our generation is the prospect of having reduced social security benefits. I recently read an article by CNBC about baby boomers who are worried about outliving their retirement money. Sixty-five-year old men are expected to live to be 84, while 65-year-old women are expected to live to age 86. If baby boomers today are expected to live into their 80s, the life expectancy for Gen-Xers might be even higher.

Spending two decades in retirement

Because we might live to be 100, we are planning to work until age 80. It's not feasible for us to save enough money in our 40s and 50s to be able to retire in our 60s. We know a lot of baby boomers who retired early at age 62 only to have massive amounts of credit card debt. We don't want to fund our retirement with credit cards.

Checking into longevity insurance

My husband and I are researching longevity insurance as a way to hedge against dwindling social security payouts. According to the CNBC article, longevity insurance can provide a steady income. We would add longevity insurance to our retirement plan at age 60. We would then take the income out of the annuity at age 80. On the negative side, we wouldn't get the money if we didn't make it to age 80 and beyond. We would only use longevity insurance to supplement our retirement.

Rethinking the 4 percent rule

Because we anticipate living to 100 or beyond, my husband and I are throwing out the 4-percent withdraw rule. According to another CNBC article, some experts say the 4-percent rule could jeopardize a persons' retirement savings during uncertain markets. It seems to me the rule is outdated, having been devised in the 1990s. At that time, stocks and bonds provided a better return. My husband and I set a goal of a withdrawal rate of just 2 percent.

Counting on our Roth

We can't afford to pay higher taxes when we are retired. To lessen the tax burden when we are doing our best to save money into Roth IRA and Roth 401(k) accounts. I would rather pay taxes now when I'm working a full-time job. If I live into my 80s and 90s, I won't want my retirement savings eaten up by taxes. Also, we have no way of knowing how high taxes will be in the future.

Although we can't control many factors in the future, we can make a few small changes now. My husband and I are paying off our mortgage early and taking advantage of our Roth accounts so that we can live to be 100 without going broke. We shouldn't have to be afraid to live.

More from this contributor:

I'm Not Letting Great Recession Haunt My Retirement

Will Gen-X Live in Poverty in Retirement?

Becoming a Late-Bloomer Millionaire

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