Longevity Risk — The Challenge of Living Longer Than Your Money
We often think of longevity as a blessing — and it is. But from a financial planning standpoint, living longer than expected introduces one of the greatest challenges in retirement: making sure your money lasts as long as you do.
This is what we call longevity risk — the possibility of outliving your savings. And in today’s world, it’s not a remote concern. Many retirees now face 25 to 30 years or more in retirement, meaning your portfolio must sustain not just years, but decades of income needs.
Why Longevity Risk Is So Complex
The heart of longevity risk is uncertainty — none of us knows exactly how long we’ll live.
Statistics can give us averages: a 65-year-old couple has nearly a 50% chance that one spouse will live past age 90. But the real challenge isn’t in the average — it’s in the “what if.”
What if you live to 95… or 100?
That uncertainty requires a financial plan that can adapt across time and circumstance — one that balances income stability with the potential for growth.
And longevity doesn’t exist in isolation. The longer you live, the more these other risks amplify:
● Inflation risk: Over 25–30 years, even mild inflation can cut purchasing power in half.
● Healthcare costs: Medical and long-term care expenses tend to rise faster than general inflation.
● Market risk: Extended retirements mean staying invested longer, which brings exposure to volatility and sequence of returns risk.
Together, these risks mean that living long requires more than just saving enough — it means designing a plan that evolves as you do.
How We Plan for Longevity Risk
Your RISA® profile helps determine how best to manage longevity risk, based on how you naturally think about income security and flexibility.
● Safety-First and Commitment: You may prefer guaranteed income sources like Social Security, pensions, or lifetime annuities to cover essential expenses. These income “anchors” ensure your basic needs are met no matter how long you live.
● Probability-Based and Optionality: You may lean toward market-based strategies and want flexibility to adjust spending as conditions change. For you, we might emphasize diversified growth investments and dynamic withdrawal strategies.
● Blended Approaches: Many retirees fall somewhere in the middle — securing guaranteed income for essentials while keeping a portion of assets invested for growth and legacy.
In every case, the goal is the same: to create a sustainable lifetime income plan that aligns with your comfort, goals, and longevity potential.
Turning Longevity Into Confidence
Longevity risk isn’t about fearing the future — it’s about preparing for it.
Living longer can be one of life’s greatest gifts, especially when your financial plan is built to last as long as you do.
If you’d like to review how your retirement plan addresses longevity risk — and how your RISA® profile can guide a more confident, resilient strategy — let’s schedule a conversation.
Planning for a long life isn’t about guessing how long you’ll live.
It’s about ensuring that no matter how long you do, your plan lives with you.
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