How to ensure your wealth lasts as long as you need

As you approach or enter retirement, you may face some challenging financial questions. Two important ones: How long do your assets need to last? And is your money invested correctly to support that length of time?

For women, it’s a particularly crucial concern because they live on average five years longer than men — and some women outlive their spouses by decades. They must figure out how to ensure their wealth can be sustained over what could be a 30- or even 40-year retirement.

“Everyone is going to have their own goals and objectives based on their unique situation,” says Cherry Shaw, Vice President and Wealth Advisor for Regions Private Wealth Management in Birmingham, Alabama. “Some women want to leave a financial legacy for their children or grandchildren. This can require a different investment strategy than one that aims to use most or all of their assets during their lifetime.”

Shaw points to certain steps that can help both women and men prepare for a potentially long retirement:

Evaluate your heredity and personal health.

Think about how long your parents and grandparents lived and whether there’s a good chance you will live as long, or even longer. While your heredity doesn’t necessarily indicate your own longevity — as Americans today are living longer than previous generations, thanks to better lifestyles and healthcare — it’s a good starting point. Also, if you have health issues, you may need to set aside more money for healthcare expenses in retirement.

Consider your goals.

Do you expect to spend most of your wealth during your lifetime, or do you plan to leave behind a significant legacy? If the latter, you may want to invest those legacy assets differently than you would assets that you expect to need. There are also tools, such as trusts, that can help you pass along assets more effectively.

Keep up with inflation.

It may be tempting to invest all the assets you’ll need during retirement in safe investments, such as cash or bonds. While such conservative investments can be a good choice for money you will need in the next three to five years, your long-term assets need to keep up with your living costs, so you don’t lose purchasing power. That may mean investing a portion of your wealth in stocks, corporate bonds and alternative investments, at least in early retirement.

Look at protective tools.

Certain financial products, such as long-term care insurance or annuities, may protect you against the risk of outliving your savings or facing large extended-care expenses later in life. Some people don’t need or want such protection. Your Wealth Advisor can help you determine what makes sense for you based on your personal situation and risk tolerance.