Increasing U.S. Life Expectancy Means Planning for Retirement Earlier

The IRS declared an increase to the average life expectancy in the U.S. at the beginning of the year, making it more important than ever for younger investors to begin planning for retirement early. 

The new lRS life expectancy table, which went into effect on January 1, provides an 84.6-year life expectancy for age zero, an increase of 2.2 years since the last table was published in 2002.

Today, younger investors are encouraged to begin planning for retirement as soon as they enter adulthood. Even without access to employer-sponsored retirement plans, there are plenty of options for young investors to set aside money for retirement.

The advantages of saving for retirement early are plentiful. Younger investors are able to sit through market swings and drawdowns as they save for retirement. With bond yields low, younger retirement savers are able to take on more equity risk, capitalizing on payout growth as well as potential high returns in growth stocks.

Early investors also benefit from their investments compounding in the time leading up to retirement.

Those who are late for planning for retirement have a smaller margin for error, meaning that they are generally advised to limit exposure to the higher risk/reward equity markets in order to protect their portfolios from potential turbulence.

It is important for advisors to help younger investors plan ahead for retirement; Nationwide offers a variety of options for advisors to provide retirement solutions for their clients.

For more news, information, and strategy, visit the Retirement Income Channel.