An average person in their 20’s or early 30’s barely thinks about retirement planning or saving up for it – but procrastinating with retirement savings plan only results in problems later on.
This is one issue young workers do not address at the right time. One that later results in haphazard planning to diversify income streams and reduce overspending habits.

Here are some retirement planning factors young workers need to consider to secure a better, post-work future:

Life Expectancy

Linking life expectancy with retirement planning might come across as a little awkward at first, but it affects more aspects of retirement than you think.

The standard retirement age was set at 65 when the average US life expectancy was 61.2 – a stark difference to what it is today, 76 for males and 84 for females. There is a lot more that goes when planning for two decades after retirement.

With ongoing medical breakthroughs further prolonging life and various factors such as family history and lifestyles influencing life expectancy – young workers may need to save for up to 40 years of post-retirement life.


Traditional pension plans are quickly crumbling under the pressure of a rising workforce; the onus of saving for your retirement lies on your shoulders.

How much should you save each year? This is dependent on several factors – the duration of your retirement, how much do you plan to spend in retirement and how many years do you have before retirement.

A 30-year-old who begins saving $10,000 a year at a general 6% annual return rate will accumulate $1.2 million by the age of 65. If that person begins saving at 40, the annual savings double to $20,000 to achieve that same amount. Timing is a very significant factor when thinking about retirement planning.


Health care costs have risen exponentially over the years, and it is one of the few items that are most likely to increase over your lifespan at a higher rate than inflation.
Post-retirement health care costs comprise of various components which include Medicare Part B, Medigap Plan F, as well as several other vision, dental, hearing, and nursing care costs which can put considerable strain on your finances.

It is estimated that a couple may spend anywhere from $250,000 to $280,000 on healthcare after retirement. For couples that need additional healthcare due to some condition, a larger reserve is required.


Your present impacts your future – and that’s particularly relevant for post-retirement savings.

The way you spend and save now impacts how much you get to spend post-retirement. It is important to draft a retirement budget which identifies your sources and uses of cash.
Not only does it help ascertain the different sources of cash, but also how much you need to cut back on your current lifestyle expenses to sustain an adequate level of living after you’ve hanged your boots.

Consider your financial priorities and understand the financial tradeoffs when making your decisions.

Invest Carefully

History is filled with case studies where it paid off to remain invested in the market. The disciplined investor has benefitted from potential long-term growth as compared to an investor who runs at the smallest sign of trouble.

Humans are driven by their emotional cues, one that plays an insignificant role in the market indices – particularly at market peaks and troughs.

An insight into investor behavior shows that over the past two decades, the average equity fund investor underperformed at the S&P 500 by over 4% per year.

While some of this dismal performance can be attributed to the average fund trailing the market, there is little doubt that most of the difference is due to investors buying at too high a price (during market peaks due to greed) and selling at too low during troughs (due to fear).

The stock market provides a platform for higher-than-inflation growth, one that savings accounts cannot offer. Careful, rational investment can pay off in the future.

Construct A Balanced Portfolio

As your working age draws to a close, conventional wisdom states that you should shift your portfolio towards more secure investment allocations. While cash and bonds do provide short-term reliability, they provide little protection from inflation.

While the increasing lifespan has increased retirement periods to 25-30 years, inflation impacts virtually everything – be it cost of food, energy, or healthcare. The quality of life, therefore, decreases with each economic slump.

Contrastingly, stocks are better options to provide for long-term inflation since they offer growth of principal and growth of dividend. Asset allocation should not only be focused on age, but also according to your financial needs.

A balanced investment portfolio should provide sufficient savings to fund short-term needs that cater to your immediate needs (<2 years) and more strategic invesments that provide for your middle term needs (3-7 years).  Take the Retirement Test

However, the portfolio should lean towards catering to your long-term needs which can range anywhere from 7-30 years. Approaching your allocation in a strategized, need-based way will create a unique portfolio customized around your needs.  Find out the 3 Keys To Accelerating Your Retirement Income.

About Beau Henderson

Beau Henderson is a financial advisor, author, coach, radio personality, and CEO of RichLife Advisors. He has helped over 3,000 clients to not just improve their relationship with money, but to live the life of their dreams.

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