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Given today’s continued high inflation, many Americans worry that they may not have enough money saved for retirement. They fear that skyrocketing food and energy prices, transportation and medical care costs could significantly affect their retirement savings.

However, there is another important factor to consider: your life expectancy.

A new report from the TIAA Institute and George Washington University shows that more than half of American adults don’t know how long people typically tend to live in retirement, which, given their potential longevity, may not save them enough money to last. as they do.

“Longevity literacy” is essential when planning for retirement.

Studies show that financial literacy among women consistently lags behind that of men, but the report found that women’s “longevity literacy” is greater than that of men, with 43% of women indicating strong longevity knowledge compared to with 32% of men.

That’s a “stunning result,” said George Washington University economist Annamaria Lusardi, director of the school’s Center for Excellence in Financial Literacy. “We really need to help women because they, for example, are aware of the fact that they are living longer, but they may not know how to deal with their longevity.”

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Therefore, greater retirement planning education will be especially important for women, she said.

On average, American men and women retire in their mid-60s. What many of them may not realize, however, is that at age 60, men can live an average of 22 more years and women 25 years longer, according to Social Security Administration estimates.

To keep your retirement money going, it’s important to use a three-pronged approach, said Surya Kolluri, director of the TIAA Institute. “Some combination of Social Security, guaranteed income for life [product]It can be a good way to hedge against inflation and financial markets risk, he said.

Inflation adjustments to 401(k), IRA contribution limits

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Inflation adjustments for 2023 also increased the amount you can save in retirement accounts. This year, you can put up to $22,500 into a traditional or Roth 401(k), plus a $7,500 catch-up contribution if you’re age 50 or older, for a total of $30,000.

You can also put up to $6,500 in a traditional or Roth IRA. With a $1,000 equivalent investment, you can save a total of $7,500 if you’re 50 or older.

Here’s the key age for retirement planning

As you approach retirement, or if you’re already retired, there are key points to keep in mind to save and withdraw the money you need for your later years. Considering you may live into your mid-80s, here are some other important ages to keep in mind:

  • At age 50, you can add more money to your retirement accounts.
  • At age 59½, you can start putting money into IRAs and 401(k) plans. If you withdraw it early, you will likely pay a 10% tax penalty.
  • You can claim Social Security benefits between ages 62 and 70, but if you start taking it at age 62, you’ll get 30% less than you would at your full retirement age (which varies depending on your birth year). On the other hand, you’ll see your benefit increase by 8% per year after your full retirement age for each year you wait to claim your benefits until age 70.
  • At age 65, you must apply for Medicare or you may have to pay a penalty if you are not covered by another health plan.
  • And turning 73 has become a very important birthday. Starting Jan. 1, the new law requires you to start taking withdrawals, or make “required minimum distributions,” from IRAs and 401(k)s by April 1, after you turn 73. The age to take RMDs will increase. up to 75 in 2033

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