The Longevity Challenge: How Living Longer Will Impact Your Retirement

how living longer will impact your retirement

How living longer will impact your retirement, given today’s ongoing high inflation, many Americans worry they may not have put away enough money for retirement.

They fear that sharp increases in food and energy prices and transportation and medical care costs could significantly affect their retirement savings.

Yet there’s another important factor to consider: your life expectancy.

According to a recent report,¹ longevity can have an even greater impact on how long your retirement money lasts than today’s record-high inflation.

Don’t Underestimate Your Life Expectancy

Today’s retirees will live longer and spend more time in retirement than any other generation in American history. In fact, did you know that a 65-year-old has a 50-50 chance of living at least 20 more years?

And even if you plan for something in the ballpark of a 20-year retirement, for some folks, that’s a dangerously low estimate. That’s because one out of every four 65-year-olds today will live past the age of 90, while one in 10 will live past 95. If you’re one of them, yet you retire in your mid-60s, you could easily end up in a situation where you run out of money with several years of retirement left ahead of you.

Let’s examine some of the issues affected by longevity:

1. Healthcare Expenses

Healthcare expenses are a huge chunk of any retirement budget—even with Medicare. According to a new estimate of healthcare costs in retirement, the average person older than 65 years old may spend $157,500 in out-of-pocket expenses for healthcare in retirement. A couple may pay an average of $315,000.² Living longer not only increases yearly healthcare outlays, but your chances of developing more serious health issues tend to increase as you get older.

2. Rising FEHB Costs

Insurance premiums continue to rise steadily in America, and that includes Federal Employees Health Benefits (FEHB) premiums paid by federal employees and federal retirees. 2024 FEHB premiums are again increasing significantly, and federal employees and retirees will be paying 7.7% more on average. In 2023, there was an 8.7% overall average increase in FEHB premiums. With this average rate of increase for FEHB (and the meager cost-of-living adjustments to pensions being much lower), the erosion of your spendable dollars is a significant factor even if you’re healthy.

3. Long-Term Care

Your odds of becoming incapacitated also increase with age, which could lead to the need for long-term care. The harsh reality is that those turning 65 today have a nearly 70% chance of needing some type of long-term care services as they age, and 20% will need it for longer than five years.³ These expenses can add up quickly since the average yearly cost of a semi-private room in a nursing facility is $89,292.⁴

Live Long and Prosper

Assess your health, and if it’s relatively strong, assume the best when it comes to your lifespan. If you operate under the assumption that you’ll live until 90 and pass away at 88, you’ll have a little something left over to leave to your children and grandchildren. And that’s a much more ideal scenario than spending down your savings and burdening your family with your bills in your late 80s.

Longevity Planning

With life expectancy on the rise, you may want to consider a longevity planning approach. Longevity planning emphasizes investing in both your wealth and health. Other than ensuring there is enough money to pay for healthcare in retirement, the other obvious hedge against rising healthcare costs in older age is to stay as healthy as possible for as long as possible.

As the old saying goes, “If you have your health, you have everything.” What goes unsaid is that if you don’t have your health, it can cost you, your family, and your adult children.

Start Planning Sooner Than Later

Planning for retirement now can help ensure you don’t outlive your savings later. But when you have no idea how long you’ll live, it’s difficult to know how long your money will last.

That’s why it’s never too early to start planning for retirement! I highly encourage you to attend one of our retirement workshops where we cover all of the federal benefits topics and the decisions that need to be made right there in the training session. You’ll leave with clear action items for each section and have an opportunity to meet one-on-one to do a deeper dive into your situation.


¹The TIAA Institute-GFLEC Personal Finance Index Survey

²Fidelity Viewpoints, Rising Healthcare Costs

³U.S. Department of Health and Human Services

⁴Genworth Cost of Care Survey


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