Thanks to medical advances, many of us will live longer than we expect. But a long life brings a financial challenge: making sure your savings last as long as you do. Discover how to plan for longevity risk.
Longevity risk is the chance that you will outlive your retirement savings. With average life expectancies rising, a 65‑year‑old today can expect to live another 20 years – but half will live longer. Planning for a 30‑year retirement is becoming the new normal.
A 65‑year‑old couple has a 50% chance that at least one will live to 90, and a 25% chance one will live to 95. Your plan should account for the possibility of a very long life.
Strategies include delaying Social Security, annuities with lifetime income, maintaining some equities for growth, and being flexible with spending.
If you retire at 65, planning for age 95 is prudent. That means your portfolio must sustain 30 years of withdrawals, possibly through market ups and downs.
Based on your age and gender, see estimated life expectancies and the nest egg required to fund a long retirement.
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Life expectancy estimates are based on Social Security actuarial tables simplified. Your actual longevity depends on health, lifestyle, and family history. Always plan for a longer horizon than the average.