So you have done the right things in accumulating funding for a comfortable retirement. You have an employer 401(k) plan, funded your IRA annually, and maybe you are in an employer pension plan. You might be forecasting how you will distribute your savings over a retirement period of 20 years. Is this adequate? This week, I discuss why and how to plan for a longer retirement period.

The average U.S. life expectancy is approximately 76 years for men and 81 years for women. Based on the averages, a 20-year retirement forecast seems conservative. However, these numbers have increased by about 10 years in the last 50 years — continuing a steady rate of increase since 1880 — and will likely continue to increase. Another wrinkle is that longevity numbers factor in deaths at all ages beyond infancy. Thus, today’s 65-year-old is far more likely to make it to age 90 than is today’s 40-year-old. According to the Social Security Administration, today’s average 65-year-old will live to age 86, and one-fourth of today’s 65-year-olds will reach age 90.

Given these “bonus” years, we must plan both for additional years and for increasing expenses each year. Research sponsored by the Society of Actuaries finds that the average 65-year-old will have out-of-pocket medical expenses of $146,400 for the 20-year period to age 85. The expected expenses for the age 85-95 period is $172,000. In other words, annual medical expenses in the third decade of retirement are more than double those in the first decade.

What to do?

Delay taking Social Security benefits until age 70, if possible. Social Security retirement benefits are maximized at age 70. The difference in benefit was designed to be actuarially neutral—on average, a higher benefit is offset by fewer years of receiving benefits. However, this computation was made decades ago, when life expectancies were lower. The maximum retirement benefit will also translate into a maximum survivor benefit for a widow(er).

Remember the 4 percent rule. Most financial planners recommend limiting annual retirement withdrawals to 4 percent of the value of the retirement fund. Over time, a retirement fund invested and returning on average 5 percent annually will support a 4 percent withdrawal rate (plus an adjustment for 3 percent inflation) for just over 30 years. Although not foolproof — several consecutive years of losses could require significant lifestyle changes — the 4 percent rule typically achieves good results.

Stay invested in common stocks in retirement. Reducing investment risk in retirement is intuitive, but completely avoiding the market risks of stocks will decrease expected returns and increase our exposure to the inflation and interest rate risks of fixed income investments.  Many planners recommend the stock percentage of a portfolio should equal 110 minus your age; this would mean that a 70-year-old should be 40 percent invested in stocks.  Risk-averse retirees can look for stocks of established, dividend-paying firms— generally considered less risky.

Annuitize part of your retirement savings. In today’s low-interest-rate environment, this is a very hard recommendation to justify because it will lock in low periodic payments.  However, the appropriate annuity will convert your lump sum into a series of payments for life.  This can protect against poor investment returns or the urge to overspend retirement assets.

Dr. James Philpot is a certified financial planner and is associate professor of finance at Missouri State University. Statements in this column are intended for educational and informational use only and are not to be construed as investment advice.

This article appeared in the November 12th, 2016 edition of the News-Leader and can be accessed online here.