“Old age is always fifteen years older than I am.”
—Bernard Baruch, American financier, investor, statesman and philanthropist

Running out of money in retirement is one of the biggest fears people have. Unfortunately, for many Americans, it is a real risk, not an irrational phobia. If you retire at age 65 as a reasonably healthy non-smoker, actuarial tables estimate you’re likely to live to age 86, as a man, and 89, as a woman. And the longer you live, the longer you can expect to live. A 90-year old non-smoker has a good chance of living to age 95, as a man, and a 97, as a woman.

However, there’s no need to scrimp, save and worry your way through retirement with “extreme couponing” (yes, that’s a thing). Follow these seven strategies to live long and prosper, have more spendable income in retirement, and never run out of money!

#1:  Stay healthy and active.

According to Fidelity Investments, a couple who retired in 2017 will spend an average of $275,000 for health care costs throughout retirement. Poor health is expensive in every way imaginable, taking a heavy mental, emotional, and financial toll.

Although it’s no guarantee, good health habits can help slash medical costs:

Move more. A startling study cited by The New York Times found that inactivity costs individuals, employers and the governments as much as $28 billion annually in medical costs and lost productivity. Exercising for 30 minutes 3-5 times per week can make a measurable difference in health and vitality.

Eat from the bottom of the food pyramid. To reduce your risk of cancer and heart disease, eat more fruits and vegetables. Avoid the “SAD” Standard American Diet, which fuels disease, and learn what “Blue Zone” researchers are discovering about the world’s healthiest and longest-living people.

Quit or moderate negative habits. Eliminate bad habits such as cigarettes or over-indulging in sugar, junk food or alcohol.

Think positively. A recent Harvard study found that “optimistic women” had nearly a 40% lower chance of dying of heart disease or stroke and a 16% lower risk of dying from cancer. Multiple other studies show that optimistic people of both sexes live longer and have less heart-related illnesses.

Exercising regularly, eating well and maintaining a positive attitude will save you money and—even more importantly—help you enjoy your life!

Need inspiration? Check out 81-year-old body-builder and personal trainer, Earnestine Shepherd.

#2:  Save more.

The average American saves less than 5% of their income. Some Americans have no savings at all, or they have debt instead. Some people invest but neglect to save and have to raid their retirement accounts—paying penalties and taxes—for every emergency.

In Busting the Retirement Lies, I recommended saving 20% of your income. That might sound intimidating or even impossible, but it’s not. It starts with a decision and it requires a mindset committed to living below your means.

Start saving—even if it’s 5 or 10% to start, and work your way up as you can. The key is to increase your saving—not your spending—as your income and financial capability increases. Here’s where you should save.

Save more money, and you’ll have liquidity for opportunities as well as emergencies. You’ll end up with more money to invest, without compromising your savings. Saving more also makes people less compelled to subject their dollars to unreasonable risks in pursuit of unrealistic rates of return.

#3:  Keep working, contributing, and earning.

According to the Social Security Administration, approximately one out of every ten people turning 65 today will live past age 95. Nearly half—43%—of retirees underestimate how long they will live by 5 or more years, reports the Society of Actuaries. And yet, Census Bureau figures show that the average age of retirement is only 63. How many people have saved enough to live another 30 or more years without earned income?

The impact of longevity and low savings rates combined with too-early retirement can be devastating. Many people are retiring without the financial capability to remain independent—one reason why we don’t recommend a traditional retirement. Work can also provide people with purpose and with their primary social interaction.

Another tremendous benefit of working longer is that you can maximize your Social Security income! Too many people take Social Security too soon and regret having a lower income.

If you don’t enjoy your work, the thought of delaying retirement may lead to despair. But when we say “don’t retire,” we mean, “Find work you LOVE and do it for as long as long as you want.” If you love what you do, it won’t feel like “work.”

It doesn’t have to be full-time work. Perhaps you’ll work part-time or seasonally. Maybe you’ll freelance and volunteer on the side. Perhaps you’ll consult, become a travel blogger, or work virtually. Just keep your mind active, keep contributing your wisdom and skills, and keep earning!

Earnestine Shepherd no longer competes in bodybuilding, but she has found her calling in inspiring and training others to be healthy and strong at any age. In this BBC video profile, she declares she’ll do the work she loves “until her last breath”:

Want to envision a future you’ll love? We’ve compiled inspiring stories and “case studies” in Busting the Retirement Lies, along with some serious number-crunching that may have you re-thinking your 401(k).

Need personal help with finding work you love? Email me (Kim Butler) with the subject line, “I want to love what I do,” and I’ll connect you with my favorite resource.

#4:  Reduce risk with asset allocation

You may know the joke that people told about how their 401(k)s “became 201(k)s” in the Financial Crisis. People who planned on retiring saw their investments plummet as much as 50%.

“Easy come, easy go” should not be a phrase that applies to your investments! But the problem is this: most people’s portfolios are comprised of nearly all stocks, and stocks are subject to systemic risk.

For investors with truly diversified portfolios, “Great Recession” was more of a speed bump than a roadblock to retirement. Reduce your risk by investing in diverse asset classes and financial instruments, such as:

  • private lending instruments such as bridge loans
  • cash-flowing real estate
  • business investments
  • alternative investments such as oil and gas
  • life settlement funds
  • and high cash value life insurance.

#5:  Raise financially independent children.

From childcare (whether that means staying home with your children or hiring childcare), clothes and food to college expenses, it’s expensive to be a parent. (But worth it!) After a couple of decades, more or less, your financial support should no longer required on an ongoing basis, and you’ll have more to save, invest, or spend.

Unfortunately, some parents keep spending resources on adult children who remain dependent. Increasingly, kids are moving back in with parents after college, where some overstay their welcome. In one recently publicized case, one set of New York parents sued to evict their 30-year-old son after he ignored 5 notices and offers of job-hunting assistance and even cash to help him move on his own.

The trend of many young adults to become self-supporting has become so widespread it now has a name: the “Failure to Launch” syndrome. Unfortunately, parents can contribute to the problem when they keep subsidizing kids and shielding them from the natural consequences of their actions. To avoid this, help kids learn responsibility and independence from a young age. We give some strategies in our article, “The Entitled Generation: 9 Keys to Raising Financially Responsible Kids.”

#6:  Focus on cash flow, not net worth.

Typical financial advice helps you accumulate assets in a brokerage account, but too often, financial plans neglect how to turn this into cash flow later. Such strategies may be a better retirement plan for advisors with “assets under management” than for YOU!

When interest rates dropped recently to historic lows, retirees faced hard choices. Should they scrimp and save to live off of “interest only”? Consume equity and risk outliving their savings? Keep the bulk of their investments in equities and pray that stocks will somehow keep going up?

We help our clients “practice” creating cash flow with assets long before they must rely on the income from investments. It’s good to accumulate assets, but you must also have reliable strategies to turn assets into income.

#7:  Consume assets strategically.

The amount of money accumulated in assets isn’t as important as the amount of spendable income produced by those assets! By accumulating the right assets and spending them in the right order, you might end up with hundreds of thousands of dollars extra in your pocket!

By strategically consuming assets in the most efficient way, you can:

  • dramatically reduce taxes
  • increase your cash flow and
  • protect yourself from market swings and low interest rates
  • while increasing your net worth and (likely) leaving more to heirs.

My husband, Todd Langford of Truth Concepts software and I recently were guests on a webinar hosted by Rick Randall of the Network of National Estate Planning Attorneys. In our presentation, we demonstrate how to replace bonds in your portfolio with high cash whole value life insurance to make a multiple six-figure difference in future spendable income! (This is why we don’t recommend bonds.)

Click to watch the video and get all of the details: “More Money in Retirement: A Case Study.”

Want a Strategy for More Income in Retirement?

We work with clients in multiple ways to help them increase cash flow. We can help you find appropriate alternative investments, some of which may provide more income than your current strategy.

We also offer the Prosperity Pathway—a fee-based advising process in which we’ll help you re-vamp your financial strategy from the ground up. The Prosperity Pathway allows you to benefit from proprietary software (our Prosperity Profile and also Truth Concepts software) to customize your financial strategy and track your progress.

Learn about our approach and contact us for a complimentary consultation today.