Updated on 06.03.13

What Matters Most to You? Planning for a Very Long Life

Trent Hamm

Marcia writes in:

I’m having a hard time figuring out exactly how much to put away for retirement each week. I’m twenty five years old and most of the advice says to put away 10% of your salary into your 401(k) but I think I should be putting away more. I have three great grandparents that are still alive and over 100 and all of my grandparents are over 70 and still alive. Unless there’s something bad and unexpected I will probably live quite a bit longer than the average person. So should I be putting away more for retirement? How much more?

The best way to answer this question is to roll the clock ahead to age sixty five and ask yourself what you would like to be doing then.

Think about it. When you’re sixty five, do you intend to walk away from your job and settle into a non-employed retirement? Do you want to perhaps seek a different kind of employment, perhaps following a dream of being a writer or a painter or something like that? Do you want to keep doing the job you’re doing until you drop to the floor?

I’ve known the answer to this question all my life. I do not want to be idle in my later years – I’ve always intended to fill them with my writing and that dream is no different now than when I was younger.

Until the final year or two of my life (or when I’m unable), I intend to work and earn some sort of income. What does that mean for my retirement savings? For the later years of my life, my retirement savings will only be a part of my income. I won’t need to withdraw all the money I need to live on from it each year.

Thus, it makes sense for me to not save quite as much purely for retirement and instead invest in long term care and long term disability insurance – these cover the situations in which I’m unable to work.

What does your story look like? Assuming good health, do you intend to keep working productively for as long as you can? If so, then you don’t need to put as much away annually as you might otherwise. On the other hand, you might want to enjoy a long retirement period that doesn’t involve working for an income. If that’s the case, then you should scale up.

Here’s the truth: most retirement planning advice out there assumes that you’ll retire at sixty five and then live without an income for at most another twenty years. In many cases, neither one of those assumptions are true. I certainly don’t want to be completely idle for the last twenty years of my life and I’d love to be able to see my great-grandchildren born – I got to know one of my own great-grandparents very well, in fact.

Instead, I think retirement planning should involve assuming you’ll live as long as possible. I’d take the age of your ancestor that lived the longest and tack on five years. Then, I’d ask myself how many of those years I wanted to spend without earning money – or with earning only some of the money I needed for retirement. Do you want a long “retirement” period or not? Some do, some don’t.

From there, you’ll start getting an idea of how many years you want to cover. Start playing with retirement calculators using these assumptions and see what you come up with. After all, if you think you’ll live to 95 and intend to work until you’re 80, you have fifty five years to save for retirement, thus you don’t need to scale up at all. On the other hand, if you think you’ll live to 95 and intend to retire at 65, you’re almost assuredly going to have to put more away for retirement.

Remember, focus on what makes you happy. If there’s an endeavor that earns a good income that you would be happy spending the rest of your life doing, then spend the rest of your life doing it!

One final caveat: long term care and long term disability insurance are both worth considering. Mostly, they’re hedges against something devastating happening in your life. They ensure that if something does happen that prevents you from working in a productive way, you won’t be a financial burden to those around you. They should at least be considered as part of any long term financial planning.

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  1. Mike Piper says:

    I love discussing this topic. So many people assume that they want to retire at age 65. But when actually asked to think about it, they realize that they’d like to continue working–just in a different line of work.

    As to my planned “retirement,” it sounds much like yours, Trent. One difference: I’m writing somewhere with a view of a body of water. :)

  2. Johanna says:

    Here I go, being all negative again:

    Personally, I’m very skeptical of any 25-year-old (or even a 31-year-old) who claims to know for sure what his life will be like at age 65. You’re trying to predict what will happen over a period of time that’s longer than you’ve been alive to date, and a lot of things can happen during that time. Even if you love what you’re doing right now, maybe you’ll feel “burned out” after doing it for 35-40 more years.

    If you save more now, you’re giving your future self the option of retiring from paid work if he wants to. And if he doesn’t want to, then he’ll have plenty of money to be generous with the people and causes he cares about. But if you save less, then your future self will have to keep working for pay, whether he wants to or not.

    I say “retiring from paid work” because I think it’s a mistake to equate “retiring” with “idleness.” Maybe your future self will want to be active, but on his own terms: doing volunteer work, devoting time to family and friends, or working at something that *could* be profitable without having to worry about whether it is or not.

    Or maybe he will want to be idle, and there’s nothing wrong with that, in my opinion. I don’t subscribe to the puritanical view that idleness is a sin per se – it’s perfectly fine to be a sleeping fox if you don’t need or want to catch any poultry.

  3. Anne KD says:

    I left my job when we got married, and stopped putting in $ to my retirement account. Looking back over the past 1-2 years, I’m happy that I didn’t put anything else in. This is especially true when I see what happened to my husband’s RA. Our retirement accounts are separate, naming each other as beneficiaries. When I get my small business up and running I’ll start putting money in to the retirement account…but I’m worried, about whether the small business will take off or whether it’ll even pay for itself. I’ve been putting off thinking about retirement the past three-four years but now I’m 40 and I see 25-30 years of saving for retirement, and feeling a crunch already. Not sure where to go from here.

  4. lurker carl says:

    Marcia is astute in observing that most “expert advice” does not have much basis in her reality. Saving only 10% of your salary won’t be nearly enough to fund 4 decades of reduced or no income.

    This is particularly important when your family exhibits a long lifespan. Health (mental and physical) declines with age and the care required will not be cheaper in that distant future. Although the help you need in the golden years can come from family, you may outlive (or live hundreds of miles from) those you would depend upon. If family/friends are unable to help with your needs, you will need the money to pay for professionals to assist you with your daily needs, either in-home care or move to an assisted living facility.

    Plan for the worst, hope for the best.

  5. Faculties says:

    You may certainly live to over 100, but you can’t count on good health till then — many people can’t even count on good health till 70. Even if your grandparents and great-grandparents are hale and hearty, everyone’s life is different, and you never know what may happen. You may get strep that turns into rheumatic fever and damages your heart. You may turn out to have MS. You may be in an accident that leaves you with a minor injury that means walking will be harder when you’re getting up in age. You may have a child with problems you want to be there for — disability, injury, or what have you. You may have a child whose challenges have caused you to save less for retirement in your later years. If you’ve saved “too much” money for retirement, then you’ll have the resources to stop working. I think it’s dangerous to conclude “I’ll have years to save, so I won’t bother now.” Save as early as you can, when the power of compounding works fabulously in your favor. I don’t think 25% or 30% of your income is too much if it leaves you with enough to live happily on.

  6. Dangerman says:

    The answer to this question is simple: immediate annuities.

  7. Patty says:

    I’m glad you brought up long-term care. It is so inexpensive to purchase it at a young age. The power of compounding – well yes, it works for the insured and the insurer. Medical costs are continuing to rise (I won’t bring up current politics) and what is covered under ‘social’ programs continues to be limited. There are so many risks in our lives, many that we just ignore. Asking these type of questions is very good. I would also ask – what are Marcia’s other dreams that she could be saving for?

    @Johanna – at the age, I wanted to so several professions. I call dreams and dreams evolve :) I believe the word ‘retirement’ will be redefined and I agree it doesn’t mean only idleness. @Faculties – saving is good – I don’t think you can have too much, @lurker – if we keep the “65” number in our heads (btw my number by govt means is 67-1/2)it could very well be 40 YEARS almost the same number of years it took you to get to that number!

  8. Lars says:

    Good thing I’m probably going to die young.

  9. What about where to save? This person mentioned saving 10% in her 401k. Where else is she saving money? People are talking about all the other things that she might want to do or that might come up between now and retirement, maybe we need to talk about access of money. The 401k is earmarked for retirement. What about an emergency fund? Then some other type of investements depending on her situation. Something she has more options and flexibility with access of the money for the things that come up in life.

  10. Amateur says:

    If the reader is 25 without dependents or outstanding debt, then he/she can definitely save more. There are other life moments to save for, house downpayment, more education, replacing an old car, or a really great life experience somewhere. Retirement definitely is not the only thing to save for at the age of 25, and the reader is writing as if he/she is able to save more which sounds like a great place to be.

  11. Evangeline says:

    Shame on all you critics! If the reader feels she will live a long healthy life and wants to save more, I say go ahead. No one–and I mean no one–ever heard someone utter the words “Gee, I really wish I had saved a whole lot less.” Far better to be safe than sorry.

  12. Rosa Rugosa says:

    @Lars – yeah, we both smoke a lot, so I’m not worried about supporting ourselves up to the 100-year mark, but I am trying to save enough so that I don’t have to eat cat food (or couunt squares of toilet paper) if we manage to make it past the 65-year mark!

  13. Rosa says:

    I’m surprised, as often as the option of staying home with kids comes up around here, that nobody is saying “sock it away now, there may be a 10-year hole in your employment at some point.”

    Even if you want to work until you keel over, you might want to do something that doesn’t pay very well; you might get sick; you might want to get married to someone who is deep in the hole and end up making up for them not saving when they were young.

    Save what you can, when you can; because things can change. When I was 20 I wan’t saving anything, but when I was 25 I was putting 20% in my 401k and another 10 or so in short-term savings. I spent down the “short term savings” staying home with my son for two years.

  14. guinness416 says:

    I also subscribe to “expect the worst, hope for the best”. I think knowing now how 60-plus year old you will want to spend your time is premature. And apart from your own health there’s the issue, if your parents and grandparents will be lucky enough to live to a ripe old age, of whether you’ll end up supporting them to some degree later on – financially or not. My dad takes a lot of care of his parents, so even if he wanted to work in retirement he really wouldn’t have the time. Anyway, make use of those great calculators out there! Personally, I think 10% is light even for “standard” lifelines, assuming you’re not jeopardizing your other goals and needs by saving more.

  15. Marcy says:

    I think the idea of trying to figure out retirement savings is pretty scary to almost everybody. So many unknowns!

    Maybe a good suggestion would be to maintain the minimum 10% retirement and then invest as much as you can* in some other way.

    Even though you don’t know what your plans for the future are, or you’re very young and retirement is a long way away, then these “other” investments can serve more than one purpose in the future. If needed, these can top up retirement, or perhaps these can be used to buy a home, start a business or something else.

    ** When I say “invest as much as you can” I mean making every dollar work for you: Work out a budget, live frugally, save what you need, spend money on stuff/experiences/life as dictated by your budget, but don’t fritter away and spare cash. If it’s lying around, or you can make do without spending then INVEST, INVEST, INVEST.

  16. steve says:

    I would suggest that a twentysomething person or any recent college graduate asking this question go visit Jacob’s site at EarlyRetirementExtreme.com for a somewhat eye-opening discussion of this topic and what is possible to do regarding retirement. Jacob may go much further than most people would, but I think a majority of us would do well to consider his advice and example and embody it to the degree that it makes sense for us.

  17. dishes and laundry says:

    @Evangeline: “No one–and I mean no one–ever heard someone utter the words “Gee, I really wish I had saved a whole lot less.” ”

    Oh, that is just not true! The very first thing I thought when I found out I had cancer, at 45, was “Why did I save all my money for retirement instead of doing the things I wanted to do.” The very first thought. Because we had been very, very frugal, and now I will almost certainly not make it to that well-funded retirement. Better safe than sorry? Safe can be very, very sorry, indeed.

  18. getagrip says:

    At get rich slowly there was an entry on this and I think that I like this advice presented by JD:

    “Why 10%?
    I think that the experts urge 10% because it’s a target people can understand, one that doesn’t seem too intimidating. It’s a convenient financial rule of thumb. My own opinion — and I’m sure the experts would agree — is that you should save as much as possible for retirement. Columnist Liz Weston has a great suggestion:

    Save 10% for basics, 15% for comfort, 20% to escape. This rule of thumb works pretty well if you start to save for retirement by your early 30s. Saving at least 10% of your income ensures you won’t be eating pet food. Fifteen percent should get you a more comfortable living, while 20% gives you a shot at an early retirement (and yes, you get to count employer contributions as part of your percentage). Wait just a decade to start, though, and you’ll need 15% for basics and 20% for comfort; an early retirement may not be in the cards.”

    I think the points are really to start early (and 25 is early) and be consistent and “learn” as you’re going, don’t just dump your money and not pay attention to fees, balances, etc. over the years. Reallocate your investments at least yearly based on your age and goals. Think about Roth versus IRA, index funds versus sector, etc., but be putting the money in somewhere and don’t get paralysis by analysis! You can make adjustments. You don’t have to be fancy, or look for complicated funds, but the only person who really cares about your money is you, so you had better pay attention to it.

    My only other advice is if you want to raise the percentage, it doesn’t have to be done today. At 25, start with 10%, then over the next five to ten years you could raise it a percentage or two if you get a raise or cost of living adjustment. That’ll get you to 15 to 20% with minimal impact on your lifestyle with plenty of time on your side.

  19. Russ says:


    I completely agree with you, thanks for posting your comment. I’m 32, and I doubt my 25-year-old self would recognise me, and certainly not my 20-year-old self. My ethics, tastes, and values have all changed hugely in that time. The idea that I can second-guess what my 65-year-old self will value is almost laughable. The best I can do for that guy is make sure he has enough money to do whatever he wants.

  20. Ellen / MoneyLounge says:

    I have to agree with getagrip (#18) on this one. It’s hard to predict what will happen in your life, so why not be prepared to not have to work? If you can comfortably save much more than 10%, you should. It never hurts to have an extra stash for when you are older. I’m sure it will be put to use.

  21. Georgia says:

    And saving for retirement is so easy. Just don’t see it. My husband and I were deep in debt and I was working 2-4 p/t jobs. But I was nearing 50 and knew if I did not begin, we would be in big trouble later. (I actually did not intend to retire and I absolutely hate it now.) So, I began with a small amount to my 503b, knowing that I could stop it if I really needed it.

    The third year I decided to put my raise in. Did that for the next 5 years or so and went in to put newest raise in. Was told I couldn’t. They said I could only put in $11 of my raise, as I had reached the maximum allowed – 25% of my gross mo. income. I was absolutely shocked. I had never saved well and couldn’t believe this was true. But it was. I only have about 1/15 of the minimum they say you need to have for retirement, but I only withdraw the minimum once a year to fix my home, car, etc. I have withdrawn $14+k in the last 4 years and my balance in only down $4k. The benefit of interest.

    I am now trying to earn some money by doing a little volunteer work – driving a lady to her doctor 3-4 times a month. They are willing to pay well, but I will only accept a smaller sum for the actual driving time. It will be more than enough to make up for the raises in Medicare in the next 2 years.

    I never thought of extended care and now it is too late. I am 72 and the cost would probably be prohibitive. Guess I’ll have to cut down on my goal of living to 123. Oh well.

    Oh – and I live in a very small town and will not look for regular work because I am financially ok at the moment and would feel guilty to take work from those who really need it badly.

  22. Craig says:

    It’s tough to have that forward mentality because who knows where life will take you a year from now, much less 40 years from now. that is the difficult for us in our mid 20’s to deal with as well as trying to enjoy having a fun life now before possible family life later.

  23. plonkee says:

    Based on the old people I know, it’s dangerous to assume that you can work past about the age of 70. All the 60+ people I know, retired or otherwise, are capable of earning a living. 70+ seems to be the point at which chronic health problems kick in, and whilst not all jobs would be out of reach, full-time work probably is.

    I’m anticipating needing to retire in my late 60s. Based on the lifespan of my eldest ancester that would see me with about 20 years of retirement. Probably not in the greatest of health. Sounds ok, but I’ll need to budget for my travelling throughout, rather than save it up for the end.

  24. This is just a guess, but I think that if you projected yourself out to age 65 and considered what life you wanted to have, you might find that it has less to do with money than we commonly think.

    True, you need a certain amount of money to be happy, but that’s true at any age. But maybe more than that you’ll need HEALTH, purpose and involvement, faith and the company of people who love and respect you.

    Money might enhance each of those somewhat, but it won’t buy you any of them.

    I think we often focus too narrowly on money when discussions turn to aging.

  25. Rosa says:

    @Kevin – my grandmother died a few years ago at 95, and I used to go to Sunday school with her quite a bit. I also spent a long time serving free food on the street in several cities – long enough to give me a horror of being poor in old age.

    There is definitely an age when money makes a HUGE difference, and it’s the place you get to when you really can’t work anymore. It depends a lot on your health and what kind of job you have (I used to work with a nearly octogenarian graphic designer, but a 70 year old worker who has to be on their feet all day or lift heavy things is going to be in a world of pain.)

    There are a lot of elderly people struggling without in-home help, or stuck in really awful nursing homes, or dependent on children or grandchildren who have no respect for their dignity. Those are money questions.

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