Living a long and healthy life is a blessing, and more Americans are reaching well into their 80s and 90s. Longevity is one of the most underestimated risks retirees face—and one of the most important to plan for early. Here are some tips to help you prepare.

Define Your Long-Term Vision

Every retirement is different. Some people dream of traveling or taking up new hobbies. Others want to support grandkids, volunteer, or continue part-time work. How you plan to spend your time should guide how much income you'll need—and how long it needs to last.

In addition to lifestyle preferences, consider:

• Housing costs (e.g., downsizing, relocating, or staying put)
• Family support needs
• Medical expenses, which often rise significantly with age

By defining your goals early, you can better anticipate the financial support required throughout retirement.

Evaluate Your Financial Position

Next, assess what you have available to support that vision:

• Income: Social Security, pensions, personal savings, or part-time work
• Assets & liabilities: Evaluate your net worth and how your accounts are structured
• Expenses: Be realistic about rising costs, especially in later years

This assessment helps identify shortfalls and opportunities to refine your approach.

Build Flexibility Into Your Plan

Your investment strategy should grow with you. Many retirees shift to conservative portfolios too soon. While protection is important, avoiding growth entirely may limit your income later on. A blended approach can help support long-term needs while managing risk.

Account for Healthcare and Longevity Costs

Health costs tend to rise with age. Medicare helps, but doesn't cover everything—especially dental, vision, or long-term care. Supplemental policies or long-term care strategies may offer added protection.

At 1st Choice Financial Services Inc., we support clients in Harrisburg, Hershey, Halifax, Lancaster, Lebanon, Enola, Mechanicsburg, and surrounding communities. Our experience with wealth management in Harrisburg and beyond helps us build retirement strategies designed to support a long and full life.

Even the most carefully designed retirement plan can face surprises. That's why maintaining liquidity is just as important as growing your nest egg. Having flexible access to funds can help you manage emergencies without disrupting your long-term strategy.

Build an Emergency Reserve

A dedicated cash reserve is your first line of defense. While the right amount varies by lifestyle and risk tolerance, many retirement planning professionals recommend setting aside 6 to 12 months of living expenses in a highly accessible, interest-bearing account. This buffer can help you avoid selling investments during market downturns or taking on high-interest debt.

Explore Other Funding Sources

In some situations, you may need to consider additional options. These come with trade-offs, so working with a retirement advisor in Harrisburg, PA, is key.

Home equity:

• Pros: May offer large sums through a reverse mortgage or HELOC.
• Cons: Can involve fees and affect future housing choices or estate plans.

401(k) or IRA withdrawals:

• Pros: Easy access to familiar retirement accounts.
• Cons: May trigger taxes or affect required minimum distributions if not timed properly.

Personal loans or credit cards:

• Pros: Provide immediate liquidity in urgent situations.
• Cons: Interest costs can accumulate quickly, especially with credit cards.

The Role of Smart Planning

Access to funds shouldn't be a last-minute scramble. A strong plan includes flexible liquidity options and a clear strategy for when and how to use them. At 1st Choice, we can help you build contingency plans that support both daily needs and long-term goals.

Inflation has been a constant headline in recent years, and it's felt in everyday purchases, from groceries to utilities. In the past, it may not have seemed like an urgent threat, but over the course of a retirement lasting 20 to 30 years, inflation can erode your financial foundation.

Understanding the Long-Term Effects of Inflation

The compounding nature of inflation puts real pressure on retirees. Without a steady paycheck, even modest inflation can shrink the value of fixed income over time. What feels like a comfortable monthly budget at age 65 may feel tight by 80 if not accounted for early.

Building Inflation Resilience Into Your Plan

The key to protecting your purchasing power is proactive planning and adaptability. Using retirement planning tools that model different inflation scenarios can offer valuable insight.

Diversification is also an effective tool. Including assets like real estate, inflation-protected securities (such as TIPS), and dividend-paying stocks may help offset rising costs and support long-term growth.

Budgeting plays a major role. As prices increase, reviewing essential versus discretionary expenses allows for smart adjustments without sacrificing your lifestyle. Annual reviews help keep your income plan aligned with real-world conditions.

Adjusting Your Withdrawal Strategy

Flat withdrawal methods—like the 4% rule—can fall short in periods of high inflation. Flexible withdrawal strategies, where you scale back spending during inflation spikes and recalibrate when markets settle, can help your savings last longer.

Regularly review your withdrawal approach, investment mix, and income sources to pursue stability, even as prices change.

Today's retirees and pre-retirees face an investment environment shaped by increased economic uncertainty, sticky inflation, and global instability. While you can't control the markets, you can prepare for their impact.

Why Volatility Matters More in Retirement

Volatility affects retirees differently than younger investors. Once you begin drawing income from your portfolio, you become more vulnerable to "sequence of returns risk"—the danger of experiencing poor market performance early in retirement. These early losses, when combined with regular withdrawals, can significantly shorten the lifespan of your portfolio, even if average returns eventually recover.

Unlike your accumulation years, retirement requires a more deliberate income strategy to help weather market fluctuations.

Smart Diversification Strategies

Diversification remains one of your best defenses, but it goes beyond simply owning stocks and bonds in retirement. Consider diversifying across:

• Company size: large-cap, mid-cap, and small-cap stocks
• Bond types: government, municipal, corporate, and varying durations
• Global exposure: international and emerging markets
• Investment styles: value, growth, and blended approaches

Working with experienced retirement advisors for Central Pennsylvania—like those at 1st Choice—can help you assess whether your allocation fits your income needs and risk comfort level.

Creating a Buffer Against Market Dips

Segmenting your portfolio by time horizon can also reduce volatility risk. Known as the "bucket strategy," this approach allocates funds into short-, intermediate-, and growth-oriented buckets. This way, you're less likely to sell growth-focused investments during a downturn, preserving their recovery potential.

With the right preparation, you can retire with confidence—even in an unpredictable market.

Many couples tend to procrastinate or overlook how their assets will transfer, assuming everything will automatically go to a spouse or partner. However, without proper preparation, your loved one could face unnecessary delays, taxes, or even legal disputes.

Update Beneficiaries and Account Titles

Start with your beneficiary designations. These often override wills and should reflect your current wishes. Review:

• Retirement accounts (401(k), IRA, Roth IRA)
• Life insurance policies
• Annuities and investment accounts

Also, consider using joint ownership or transfer-on-death (TOD) designations to streamline transfers and avoid probate.

Review Survivor Benefits

If you have a pension or annuity, joint-and-survivor options can help maintain income for your spouse after your passing. These choices may lower the initial payout but can offer more stability, especially in households with one primary income source.

Evaluate the Role of Life Insurance

Life insurance can be key in protecting your spouse's financial well-being. Term policies are often affordable and can cover specific needs like income replacement or debt payoff. In contrast, permanent policies may offer added flexibility.

Avoid Delaying Your Estate Planning

Finally, make sure you've prepared legal documents like a will, power of attorney, and healthcare directive. These tools can help protect your spouse and simplify decision-making during emotionally difficult times.

If your estate is more complex, trusts or other tools may be worth exploring to reduce probate and preserve assets. Working with financial and legal professionals who understand Pennsylvania laws can assist you in creating a plan that reflects your intentions.

Many retirees are surprised to discover how much of their income may still be subject to taxes. Even with careful savings, taxes can erode what you take home in retirement, especially if you rely heavily on traditional retirement accounts.

Fortunately, there are ways to prepare. A thoughtful tax strategy can help you keep more of your income and reduce surprises down the road.

Understand How Retirement Income Is Taxed

Your income in retirement may come from a mix of sources—some taxable, some not. It's important to know the difference:

• Traditional IRAs and 401(k)s: Withdrawals are taxed as ordinary income.
• Social Security: Depending on your combined income, up to 85% may be taxed federally.
• Roth IRAs: Qualified withdrawals are tax-free.
• Pensions: Typically taxed at ordinary income rates.
• Investment accounts: Dividends, interest, and capital gains can generate taxable events.

1st Choice's retirement planning specialists in Central Pennsylvania can help you forecast how these income sources may interact and how to position them effectively.