Retirement Strategist
Pamela Hess, Retirement Strategist, sums it up like this: “Longevity is a multiplier that affects nearly every retirement decision.” This is why longevity deserves attention well before retirement begins.
Average life expectancy is only a starting point
Average life expectancy is a useful reference, but individual outcomes vary widely. For example, our Guide to Retirement notes that among 65-year-old women who are non-smokers in excellent health, more than half may reach age 90.¹
Applied to couples, however, life expectancy is a more complex calculation: How long will each spouse live? Among healthy couples, there is a nearly three-in-four chance that at least one person will reach age 90.1 Thus, a couple retiring in their mid-60s may realistically need income to last for 30 or 35 years, including years when one spouse is living alone.
A well-thought-out retirement plan needs to account for such possibilities. The length of retirement influences how long income must last, how costs may evolve and how much flexibility a household needs along the way.
Wealth and longevity are closely connected
Research has consistently found a link between wealth and lifespan. One study of U.S. adults age 50 found a 12.7 and 13.6 year difference in survival, for men and women, respectively, between the lowest and highest household-wealth quintiles. The relationship is complex and likely runs in both directions—greater financial resources may support better health and longevity, while better health may also make it easier to build and preserve wealth. For retirement planning, the important takeaway is that households with greater financial resources may also need to prepare for those resources to last longer.2
Build income for a retirement that could last decades
A longer lifespan can increase the value of lifetime income. Social Security, pensions and appropriate annuity options can help cover essential expenses, while invested assets provide growth potential and flexibility.
Social Security claiming is an important part of this discussion. Delaying benefits increases monthly payments up to age 70. Whether waiting makes sense depends on an individual’s health, available resources and household circumstances. Importantly, the decision should account for income needs later in life, including those of a surviving spouse.
For households relying on portfolio withdrawals, review whether the spending plan is sustainable over a longer time horizon. This does not necessarily mean spending less today. It means understanding what adjustments may be needed if retirement lasts longer than expected.
Prepare for rising costs and changing spending needs
A longer retirement means planning not only for more years of spending, but also for how costs may change over time. While some expenses may decline with age, health care, prescription drugs, housing changes and at-home support may become more significant.
Health care illustrates how longevity can magnify retirement expenses. For example, a 65-year-old covered by Original Medicare could face estimated Medicare-related costs that rise from about $627 per month today to $1,779 per month by age 95, measured in 2026 dollars. The exact amount will vary, but a longer retirement creates more exposure to health care inflation and periods of greater medical and care needs.3
Note: These projected costs do not include most long-term care expenses, making a separate conversation about future care needs essential.
Plan for a possible progression of care
A household at age 90 may look very different than it did at age 65. Housing, transportation and help with daily activities can become more important, even when spending on travel or entertainment declines.
Over their lifetime, 75% of women and 64% of men are likely to need help with everyday activities.4 Among those over age 65 with long-term care needs, roughly two in five require assistance for more than five years.5 Medicare generally does not cover ongoing custodial care, such as help with bathing or dressing. While Medicaid may help some individuals, eligibility requirements vary by state.
Families should consider how care would be funded, who could provide it and whether or not the physical setup of retirees’ current homes would meet their needs. These conversations are more easily undertaken before care is needed, when families have more choices and can be realistic about how much support relatives can provide.
Retirement planning implications
Advisors and plan sponsors can bring longevity into conversations long before retirement, when people still have time to adjust, for example with:
Planning tools that illustrate outcomes through age 95—or beyond, where appropriate
Education that connects investing, Social Security, income and later-in-life care instead of treating them as separate decisions
Plan design that supports retirees with a variety of features, such as remaining in the plan, flexible distribution options or access to retirement income options
Conclusion
No one can predict exactly how long retirement will last. Because longevity can vary with health, household circumstances and financial resources, planning for a longer life can help people preserve purchasing power, create more durable income and keep more options open in the years ahead. For more information, please see our Guide to Retirement.