Investor’s column: Planning for longer retirement horizons | Bradenton Herald

If you watch the news, at times it can seem as if the world is falling apart, so it’s easy to get discouraged about where we are headed. But sometimes a little perspective is all we need.

While things may seem dire at times, we truly have come a long way.

Let’s review some facts about how our world has vastly improved during the past two centuries:

• Two hundred years ago, only six out of every 100 people in the world were not living in extreme poverty. Today, 90 out of every 100 are not in extreme poverty, meaning that only 10 percent of the world remains in this extreme condition.
• Basic education and literacy have flipped. Two hundred years ago, only 15 out of every 100 had experienced basic education and could read. Today, only 15 out of every 100 have not been afforded basic education and cannot read.
• Democracy has made great strides. Two hundred years ago, only 1 percent of the world’s population lived in a democracy. Today that number is 56 percent.
• Two hundred years ago, 43 of every 100 children died before the age of 5. Today, only four out of every 100 children die before age 5 worldwide.

SIGN UP

I could go on and on with the advances made to reduce per capita cancer deaths and the longer life expectancy that most experience today. There is still room for continued improvement and I believe the rapid pace of scientific advancement will continue to make our lives better.

What does this have to do with our financial and investment plans. Here, the news is good and bad.

First, the good news: Advancements in our knowledge and understanding create opportunities for investment that offer the chance for growth in the value of our investments and how a more healthy, peaceful world may be able to achieve more growth and opportunity as well.

The bad news? Quite simply, the advancements that make us healthier and live longer lives put great pressure on our retirement income plans. This includes pension plans for state and federal retirees and those who may have a pension plan from a large corporation.

For those using a 401(k) or an IRA to supplement federally funded Social Security benefits, a longer life means we are now planning for 30-year retirement horizons instead of the 10-20 years previous generations expected.

Experiencing devastating losses in portfolio value while drawing on your investments in retirement may put you at risk of a reduction in lifestyle, or the risk of running out of money during your lifetime.

I encourage a well thought out plan for those planning their retirement or those early in their retirement lifestyle.