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You'd Better Be Ready for a 40-Year Retirement

NEW YORK (TheStreet) -- With people living longer, financial advisers are starting to suggest their clients to "go long" on retirement savings.

The average life expectancy in the U.S. today is 78.7 years, with women living longer than men, 81 years compared with 77 years.

But that's a lot longer than Americans' life expectancy back in 1970, which was 70.8 years.

With Americans living longer, often into their 80s and 90s, advisers are piping up about a so-called "40-year retirement," meaning they'll need a lot more cash saved up for retirement.

Also see: Bank Savings Low, Americans Dip Into Retirement Savings

"People are living longer," says Nicole Mayer, a partner at RPG-Life Transitions Specialists, a Chicago wealth management firm. "Medical advancements and technology are keeping us alive longer. The 2014 Mortality Tables are coming out soon and the actuaries are telling us that the average age of death is a lot later."

Mayer says if you don't have a retirement plan that factors in living to 100, you're selling your financial future short -- literally.

"As people are living longer, they need a greater amount of savings to carry them through retirement," she says. "Between inflation, medical bills and other expenses, retirement savings need to last longer than 10 to 20 years."

The key to good retirement money management is not to calculate based on the expected age of life, but rather than the maximum age, which is causing some retirees to outlive their money. "People should shift towards a 40-year retirement plan versus a 20 year plan," Mayer says. "However, to implement this type of strategy, savings need to be more aggressive, whether it is starting to save earlier, retiring later, or saving more in retirement accounts each month."

Also see: How to Keep Inflation From Killing Your Retirement

It's not only about being aggressive -- you need to have a good, cohesive financial strategy too. "It doesn't matter how old you are, if you have $100,000 and lose 40% of your portfolio you are left with $60,000 and you now need a 67% return to get back to your $100,000," she says. "Slow and steady wins the race. The last 10 years in the market is the perfect example."

Based on the 40-year retirement, should Americans recalculate their long-care health savings, too?

"Absolutely," Mayer says. "Don't think that your expenses are going to be less in retirement.'

"What we find is clients are spending the same amount in retirement as they did when they are working. While they may not be active traveling and such, health care costs will be a big part of their expenses."

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