The short answer
Longevity risk is the risk of outliving your money, and it is a real planning challenge because a retirement can last 30 years or more. Someone retiring in their early 60s could easily need income into their 90s, and planning for only an average lifespan risks running short if you live longer than average. Managing longevity risk means building a plan that can sustain income for a long life, often by combining guaranteed lifetime income with investments that keep growing.
So longevity risk is the danger of outliving your savings, and planning for a long retirement rather than an average one is how you manage it.
Why it is easy to underestimate
People often plan around average life expectancy, but averages mean many will live well beyond them, and a couple has an even higher chance that at least one spouse lives to an advanced age. Underestimating longevity can lead to spending down savings too quickly. Planning for the possibility of a long life, not just the average, protects against this. Our guide to the guaranteed income floor covers one way to secure lifelong essentials.
The trap is planning to the average when many people, especially one member of a couple, live well beyond it.
How to manage it
Tools for managing longevity risk include guaranteed lifetime income such as delaying Social Security for a larger benefit or using an annuity to cover essentials, keeping growth investments to outpace inflation over decades, and setting a sustainable withdrawal rate. Combining these helps ensure income lasts. Because the decisions are significant, professional guidance helps. Our annuities overview covers products that provide lifetime income.
The takeaway: manage longevity risk by planning for a long retirement, using guaranteed lifetime income for essentials and growth investments to sustain a 30-year horizon.
Frequently Asked Questions
What is longevity risk in retirement?
The risk of outliving your money. Because retirement can last 30 years or more, planning for only an average lifespan risks running short if you live longer than average.
How do I plan for a long retirement?
Combine guaranteed lifetime income, such as delaying Social Security or using an annuity for essentials, with growth investments to outpace inflation and a sustainable withdrawal rate.
Why not just plan for average life expectancy?
Averages mean many people live well beyond them, and couples have an even higher chance one spouse reaches an advanced age, so planning only to the average risks running out of money.
Free Consultation
Have Questions About Your Situation?
Every Medicare situation is different. Our Wyoming and Utah advisors provide free, personalized guidance — no pressure, no obligation.