What if you live to 90? Your retirement savings may need to last much longer than you think

Reports coming in for today mention that When you calculate how much you need for retirement, what age do you assume you will live to?

It is an uncomfortable question, but an important one.

Someone retiring at 60 who plans only until 75 is preparing for 15 years without a salary. If that person lives until 90, the same money needs to backing another 15 years.

That is why longevity should be built into retirement planning from the beginning.

Don't plan only until 75 or 80

Nobody knows exactly how long they will live, so it makes sense to leave yourself some room.

If you retire at 60, planning until 90 means preparing for roughly three decades of expenses. Retiring earlier makes that period even longer.

Recent retirement planning guidance in India has similarly suggested looking as far as age 90 rather than assuming savings only need to last until 75 or 80.

Running out of money at 70 is a very different problem from running short at 88, when returning to work may no longer be realistic.

Inflation doesn't stop when you retire

Your retirement expenses will not stay set.

Groceries, electricity, domestic help, travel and other everyday costs are likely to climb over time.

Even relatively moderate inflation can make a big difference over 20 or 30 years. This means a monthly income that feels comfortable when you retire may feel much tighter in your 80s.

Your retirement plan as a result needs to account not just for today's expenses, but for how those expenses could change over several decades.

Healthcare could take a bigger share of your money

You may spend less on commuting, work clothes and other job-related costs after retirement. Healthcare can move in the opposite direction.

Insurance premiums, medicines, diagnostic tests, hospitalisation and regular medical care can become more important as you grow older.

There is additionally the possibility of needing home nursing, a caregiver or assisted living later in life. These expenses deserve their own place in the retirement calculation rather than being treated as an occasional emergency.

Don't keep everything in cash after retirement

Moving every indian rupee into a savings account or set deposit the moment you retire may feel safe, but a long retirement additionally creates an inflation problem.

If part of your corpus needs to backing you 15 or 20 years from now, that money may still need some potential for expansion.

The appropriate mix will depend on your age, expenses and appetite for risk. The objective is to balance stability for money you may need soon with expansion for money that will be needed much later.

Be careful around withdrawing too much in the early years

The first few years of retirement can feel financially comfortable. You have a large corpus, fewer work commitments and perhaps plans to travel.

But spending heavily at the beginning leaves less money invested for later.

Think of your retirement corpus as money that may need to pay you a monthly income for 25 or 30 years, rather than as a large lump sum available to spend.

Review the plan even after you retire

Retirement planning does not end on your last day at work.

Every few years, check how much you are spending, how your investments are performing and whether your healthcare needs have changed.

If you are spending more than anticipated, making adjustments in your 60s is easier than discovering the problem in your 80s.

The goal is not to predict exactly how long you will live. It is to make sure that living longer than anticipated becomes something to celebrate, rather than a financial problem.