Living to 95 sounds fantastic—unless your nest egg quits at 85.
This guide shows you exactly how to make your money last at least as long as you do.
Why Longevity Planning Matters
Life expectancy in the United States keeps creeping upward. The CDC’s latest data puts the average at 78.4 years overall—75.8 for men and 81.1 for women. That means roughly half of today’s 65-year-olds will see their 90th birthday, and many will blow past it. Add in rising medical bills, unpredictable markets, and longer retirements, and it’s easy to see why “running out of money” tops the list of retiree fears.
The good news? You can tame longevity risk with a smart, flexible plan. This article walks you through five practical steps—estimating how long you might live, layering predictable income, guarding against big-ticket costs, inflation-proofing your savings, and adjusting as you go.
The Longevity Challenge
What the Numbers Say About Life Expectancy
- Women live longer. On average, women outlive men by about 5 years. If you’re a healthy, nonsmoking 65-year-old woman today, actuarial tables give you better-than-even odds of seeing 90.
- Lifestyle counts. Exercise, diet, and staying engaged can push those odds higher. Family history, chronic disease, and smoking can pull them lower.
- Expect the unexpected. Even if statistics say 85, remember 50 percent live beyond the median. Planning for 95 gives you breathing room.
Why People Outlive Their Money
- Inflation’s silent squeeze. Even at a moderate 3 percent, prices double roughly every 24 years.
- Healthcare sticker shock. Fidelity estimates a 65-year-old retiring this year will need about $165,000 just for health care over the rest of their life.
- Sequence-of-returns risk. Poor market years early in retirement can drain a portfolio faster than the same losses later on.
- Lifestyle creep. Travel, hobbies, and grandkids are fun—and expensive—if they aren’t budgeted honestly.
Step 1: Pin Down Your Longevity Number
Estimate Personal Life Expectancy
Use at least two online longevity calculators (try livingto100.com or the Social Security Life Expectancy Calculator) and average the results. Adjust up or down for genetics or major health factors.
Calculate a Baseline Budget
Separate “core” expenses (housing, food, insurance, utilities) from “discretionary” expenses (travel, gifts, hobbies).
- Start with today’s dollars.
- Inflate at 3 percent to be safe.
- Project out to at least age 95—or 100 if longevity runs in the family.
Run a Shortfall Stress Test
Plug those numbers into a simple spreadsheet or any free retirement-income tool. Run a best-case, base-case, and worst-case market scenario. The goal is to reveal the year your money dries up so you can fix the gap now, not when you turn 88.
Step 2: Build Multi-Layered Income Streams
Max Out Guaranteed Income
- Social Security: Each year you delay claiming (up to age 70) raises monthly checks by about 8 percent. For many Americans, holding off is the cheapest lifetime annuity on the market.
- Pensions: If you have one, choose survivor benefits so a spouse keeps getting checks.
Create Bond-Like Cash Flows
- Laddered Treasuries and CDs: Spread maturities over one- to five-year rungs so something always comes due.
- I Bonds: Federal savings bonds that track inflation—up to $10,000 per person per year.
Consider Lifetime Annuities for Gap-Filling
- Single-Premium Immediate Annuities (SPIAs): Turn a lump sum into monthly income that never runs out.
- Deferred Income Annuities & QLACs: Buy now, income later (often starting at 80 or 85) to hedge extreme longevity.
- Watch the fees. Stick to plain-vanilla contracts from insurers with strong credit ratings.
Keep Growth Engines Running
Even after 60, most retirees still need stocks for long-term growth. One popular “bucket” system:
- Years 0–5: Cash & short-term bonds for spending.
- Years 5–10: Intermediate bonds.
- Years 10+: Stock index funds for growth.
Rebalance annually so you aren’t forced to sell stocks after a market drop.
Step 3: Guard Against Big Retiree Expenses
Health Care & Long-Term Care
- Medicare primer: Part A (hospital) is usually free; Part B has a premium; Part D covers prescriptions.
- Medigap vs. Medicare Advantage: Medigap offers broader provider choice; Advantage may bundle extras like dental.
- Long-Term Care Insurance: Buying around age 60 costs about $1,200 a year for men and $1,900 for women for a mid-level policy. Policies get pricier every year you wait.
- Self-funding: If premiums seem steep, earmark a separate investment pool for future care.
Taxes in Retirement
- Roth conversions: Gradually move money from traditional IRAs into Roth accounts before Required Minimum Distributions (RMDs) kick in.
- Tax-smart withdrawal order: Spend taxable accounts first, then traditional IRA, save Roth for last—or as an estate asset.
Housing Decisions
- Aging in place upgrades: Budget for ramps, grab bars, and wider doorways.
- Downsizing: Selling the big house can free equity and cut upkeep.
- Reverse mortgage: Last-resort source of cash; useful only if you plan to stay put long-term.
Step 4: Inflation-Proof Your Plan
- TIPS (Treasury Inflation-Protected Securities): Principal adjusts with the Consumer Price Index.
- Dividend-growth stocks & REITs: Companies with a track record of raising payouts can offset rising costs.
- Annuities with COLA riders: Some SPIAs offer annual cost-of-living bumps—usually in exchange for a lower starting payout.
Step 5: Build Flexibility Into Your Withdrawal Strategy
The 4 Percent Rule—Still Useful?
The classic “4 percent rule” says you can spend 4 percent of your portfolio in year one, then adjust for inflation each year. Recent research still finds it broadly relevant, but many planners now aim for 3.5–4 percent to add safety.
Dynamic Spending Adjustments
- Guardrail approach: If portfolio value falls 20 percent, cut withdrawals to 3 percent. If it rises 20 percent, raise to 5 percent.
- Pause big splurges (new car, deluxe cruise) after market downturns; resume when balances recover.
Emergency Liquidity
Keep at least six months of core expenses in a high-yield savings account. A standby HELOC or cash-value life insurance can serve as a backup if you hate large cash cushions.
Monitoring and Course-Correcting
- Annual retirement physical: Review spending, taxes, and portfolio returns every year on the same date—think of it as a financial birthday.
- Rebalancing calendar: Reset investments to target percentages once a year or when any asset drifts more than 5 points.
- Life events checklist: Update the plan when a spouse dies, a child moves back in, healthcare needs jump, or you inherit money.
Frequently Asked Questions
Q1. Is 5 percent a safe withdrawal rate if I retire at 60?
5 percent usually pushes the edge unless you have hefty guaranteed income or a short life expectancy. Most planners recommend 3.5–4 percent.
Q2. How much cash should I keep once I stop working?
Aim for 6–12 months of core expenses. More can feel safe but drags long-term growth.
Q3. Are deferred annuities worth it if I have no pension?
Yes—especially QLACs inside an IRA. They kick in later life, covering basic bills if you hit 85-plus.
Q4. What’s the best age to buy long-term care insurance?
Most experts say between 55 and 65. Premiums spike after that and medical underwriting gets harder.
Q5. How often should I review my plan with a pro?
At least once a year, or anytime life throws a curveball—major medical event, death of a spouse, big market crash.
Key Takeaways
- Plan for 95, not 85. Better to leave money behind than run out.
- Layer guaranteed income first. Social Security delay = free longevity insurance.
- Fence in big costs. Budget for health care and consider long-term care coverage early.
- Keep a growth engine. Stocks still matter—just right-size the slice.
- Stay flexible. Adjust withdrawals, rebalance, and rerun projections every year.
Conclusion
Longevity risk isn’t a monster under the bed—you can see it coming and disarm it. With a clear-eyed budget, multi-layered income, and a willingness to tweak along the way, your money can outlive you, not the other way around. Start today, run a fresh check-up each year, and consider partnering with a fiduciary adviser who keeps your best interest front and center. Then go enjoy that 95th-birthday cake—confident the tab is covered.