The National Center for Health Statistics says the average U.S. life expectancy is less than 79 years of age and has decreased in the last two years. However, a 65-year-old retiree may live much longer than that – usually until 85 years of age.
Why is that?
Average Lifespan Is Only An Average
It’s because there is a lopsided death curve. Once a person reaches 65, they’re past the ailments infants are often inflicted with, no congenital disability that shortened your lifespan or you didn’t die in a car accident that kills more 20-somethings.
When you reach 65, you’ve overcome the numerous death risks and made good choices. This is especially true if you’ve retired from your federal career.
There’s even a possibility – about 49 percent) that you and your spouse could live to be 90 or 95. There’s an 18 percent chance that you alone could be 95-years-old.
For the average person, there are specific health practices that are somewhat in your control such as:
- Cardiovascular disease
- Kidney disease
If you eat the right, healthy foods – no sugar or processed foods – and avoid smoking and drinking excessively, you reduce the chances of suffering from this diseases and others. You boost the possibility of reaching the 90s and 100s.
How To Make Your TSP Account Lasts Longer
If you were to live until your 90s, this means you live 25 to 30 years beyond retirement. How are you going to survive during this time?
Think of it this way: You have $250,000 in your Thrift Savings Plans, and it continues to earn six percent each year from stocks and bonds. You could withdrawal $15,000 a year for your living expenses to complement your pension. The money in the TSP would last roughly 28 years.
If the money only earns up to five percent each year (not entirely unrealistic for the portfolio of a conservative retiree) or if the market suffers a severe drop (recession), the money may not last any more than 20 to 25 years. How will you survive then if you live past this time?
This is why it’s essential to plan for all contingencies – you and your spouse could live into your 90s, even reaching 100, the market may not be good at some point, or you may have higher than expected retirement expenses such as expensive medical bills.