retirement

5 ways to make retirement savings last

What if you last longer? The insurance payout would last as long as you do. But your own funds would dry up in short order.

A number of large insurers are offering these policies, including MetLife, the Hartford and New York Life. Sticking with large and predictably solvent companies like these is important because if the insurance company that sells you the annuity goes belly up, your longevity insurance will die with it.

Shop carefully to avoid having your initial investment eaten up by commissions or frills that you don't really need. You can buy policies that will return the initial investment to your heirs or provide options for taking the money early if you should need it, but you'll pay dearly for these, says Len Reinhart, president of Lockwood, a Philadelphia-based asset management company.

He recommends looking for a stripped-down deal that will provide an income stream and cost no more than 3 percent to 5 percent in commissions or upfront load.

2. Delay taking Social Security 

If you start receiving benefits at your full retirement age -- 66 for many people retiring in the next few years -- you'll get 100 percent of your monthly benefit. If you delay receiving retirement benefits until after your full retirement age, your check continues to increase.

For instance, if you wait until age 67, you'll get 8 percent more for delaying benefits for 12 months. At age 70 -- the longest you can wait -- you get 35 percent more than you would have gotten at full retirement age and 83 percent more than you would have received if you'd taken Social Security at age 62, when it's first available. These percentages will differ slightly among recipients because working longer increases the amount they have paid into the system and those who earn more get more.

To translate this into dollars and cents, if you turn 62 this year and qualify for the maximum amount of Social Security, your monthly benefits at ages 62, 66 and 70 are $1,599, $2175 and $2926.

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Meanwhile, the median life expectancy for those who reach 62 in 2006 is 85 years for women and 80 years for men. But that means 50 percent of people will live longer than that. The cash value of waiting to age 70 compared to age 62 in this scenario is at least $1,327 per month. If you have other assets or continue to work and can wait until age 70 to start collecting, Social Security will kick in with a hefty premium about the time that you may start to need it most.

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