Longevity Risk

Retirement

Longevity risk is the chance of outliving your retirement savings — increasingly serious as life expectancy rises. A 65-year-old US couple has a 50% chance one will live past 90 and 25% chance one lives past 95. Standard retirement planning targets age 95 or 100. The conventional 4% withdrawal rule assumes 30-year retirements — those starting at 55 face 40+ years. Defenses against longevity risk: maxing Social Security through delay, lifetime annuities for essential expenses, conservative withdrawal rates (3-3.5%), maintaining equity exposure throughout retirement, planning for higher healthcare costs later. Longevity insurance (deferred income annuities) is a specific tool for this risk.