What If I Live to 100? Planning for a Long Retirement

Plan for a long life, not an average one

Life expectancy is an average. Plan around it and you have about even odds of outliving the plan. That’s not a bet most people would take with their house, and it’s the one they make with retirement.

The longer view is the realistic one. People who reach 65 in good health often live well past the average, and for a married couple the odds that at least one of you lives into your 90s are high. The surviving spouse, most often the wife, is the one who needs the money to last.

You don’t need a crystal ball. The free Actuaries Longevity Illustrator, from the American Academy of Actuaries and the Society of Actuaries, shows the odds of reaching 85, 90, 95 and 100 for your own age, health and household. Most people are surprised by the answer.

Why it matters more for women

Women, on average, live longer than men. That alone stretches the money. But several other things often stack on top:

• More years on your own. Many women outlive a spouse, sometimes by a decade or more, and one household’s costs don’t fall by half when income does.
• Smaller benefits to stretch. Years out of the workforce for children or caregiving, and lower pay along the way, can mean smaller Social Security and retirement savings.
• Higher health and care costs late in life, simply because of more years at older ages.

None of this is a reason to worry. It’s a reason to plan for the actual length of the retirement, and to plan for the survivor, not only the couple.

Five ways a plan makes money last as long as you do

1. Build a lifetime income floor. Cover your essential expenses with income that lasts as long as you do: Social Security, any pension, and, where it fits, guaranteed income. Then a long life is covered no matter what markets do. What Does Guaranteed Income Actually Mean? explains what those guarantees promise and what they cost.

2. Make the Social Security decision for the survivor. When one spouse dies, the survivor keeps the larger of the two checks. The higher earner’s filing age sets the survivor’s income, possibly for decades. That makes waiting one of the most valuable longevity decisions a couple can make. When Should I Take Social Security? covers how to decide.

3. Keep part of the portfolio growing. A retirement that may last 30 years needs some money invested for growth, not all of it parked in cash. Our three-bucket strategy keeps the next two years of income steady while the long-term bucket has time to grow.

4. Plan for health and long-term care. The later years are when care costs land, and Medicare doesn’t pay for most long-term care. What Will Healthcare Cost Me in Retirement? covers the options.

5. Plan for inflation. Over 25 or 30 years, even modest inflation can cut purchasing power in half. Income sources that rise with inflation, like Social Security, are worth more the longer you live.

Check your number against a longer life

If your plan only works to 85, it’s worth knowing now. How Much Do I Need to Retire? walks through the math, and the free Retirement Blind Spot Check shows where your plan may be exposed. Longevity is one of the six considerations we plan around for every family, and we’re glad to run your plan out to 95 or 100 with you.

Sources

• American Academy of Actuaries and Society of Actuaries, Actuaries Longevity Illustrator. Odds of reaching each age by age, sex, smoking status and health.
• Social Security Administration, survivor benefits: a surviving spouse can receive the larger of the two benefits.
• Nothing on this page is a recommendation to buy, sell or hold any security or insurance product, or advice about your particular situation.