Sharon Epperson -
CNBC
Given today's high inflation, many Americans fear they haven't saved enough for retirement.
They fear that sharp rises in food and energy prices and in the costs of transportation and medical care could significantly affect their retirement savings.
But there is another important factor to take into account: life expectancy.
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A new report from the TIAA Institute and George Washington University reveals that more than half of American adults don't know how long people typically live in retirement, which, given their potential longevity, could mean they don't save enough to make ends meet. lasted as long as they did themselves.
“Longevity Insights” Needed to Plan for Retirement
Studies show that women's financial literacy is consistently lower than that of men.
However, the report concludes that women's “longevity literacy” is higher than that of men: 43% of women demonstrate strong knowledge of longevity, compared to 32% of men.
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This is a “surprising result,” says Annamaria Lusardi, an economist at George Washington University and director of the Global Financial Literacy Excellence Center.
"Maybe we actually need to provide help to women, because they are aware, for example, that they live long, but they may not know how to deal with their longevity."
Consequently, more education about retirement planning will be especially important for women, she said.
The Government encourages people to participate in retirement funds for their retirement
Sept.
12, 202201:56
On average, Americans retire at age 60.
However, many of them may not realize that at age 60, on average, men can live another 22 years and women 25 more years, according to calculations by the Social Security Administration.
To make retirement money last, it's important to take a three-pronged approach, says Surya Kolluri, director of the TIAA Institute.
“A combination of Social Security, guaranteed income for life, plus investments” can be a good way to protect yourself from the risk of inflation and instability in financial markets.
Inflation adjustments increase 401(k) and IRA contribution limits
Inflation adjustments for 2023 have also increased the amount of money you can save in retirement accounts.
This year, you can put up to $22,500 in a traditional or Roth 401(k) account, plus a $7,500 “catch-up” contribution if you're age 50 or older, up to a total of $30,000.
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You can also contribute up to $6,500 to a traditional or Roth IRA.
With a $1,000 catch-up contribution, you could save a total of $7,500 if you're age 50 or older.
These are the key ages in retirement planning
As retirement approaches, or if you're already retired, there are key milestones to keep in mind to accumulate and withdraw the money you'll need for your later years.
Considering you may live into your mid-80s, here are other important ages to keep in mind:
At 50, you can add even more money to your retirement accounts.
At age 59 years and six months, you can start withdrawing money into IRAs and 401(k) plans.
If you withdraw it early, you will likely pay a 10% tax penalty.
Between the ages of 62 and 70 you can apply for Social Security benefits, but if you start collecting them at 62 you will receive 30% less than you would receive at your full retirement age (which varies depending on the year of your birth).
On the other hand, for each year that you wait to reach full retirement age to claim benefits, up to age 70, you will receive an 8% annual increase.
At age 65, you must apply for Medicare;
otherwise, you may have to pay a penalty if you are not covered by another health plan.
Also, turning 73 has become a very important birthday.
Starting January 1, a new law requires him to start withdrawing money—or making “required minimum distributions” from IRAs and 401(k)s—by April 1 of the year he turns 73.
In 2033, the minimum age for withdrawals will be 75 years.
