Answering One of Retirement Planning’s Biggest Questions: How Long Will Your Money Need to Last?

One of the most difficult challenges when planning for retirement is dealing with uncertainty. Markets fluctuate, tax laws change, healthcare costs rise unexpectedly, and, perhaps most difficult of all, no one knows how long they will live for. However, longevity—the number of years a person can spend in retirement—is one of the most critical assumptions underlying any financial plan or strategy.

This question becomes even more pressing as people approach retirement age. Underestimating life expectancy can lead to running out of money too soon, whereas overestimating it can lead to unnecessary sacrifices during working years. Finding a reasonable, personalized estimate is critical, and longevity calculators and careful financial planning can help significantly.

Grimes Financial Group, based in Columbus, Ohio, believes that longevity planning is one of several components of a personalized retirement plan. Rather than relying solely on generic averages, we help clients understand how long their savings may need to last and how to plan accordingly.

Why Longevity Is So Hard to Predict

Many Americans continue to rely on broad life expectancy averages when planning their retirement. For example, federal statistics may indicate that someone approaching retirement age today can expect to live into their mid- to late 80s. While these figures are useful for understanding population trends, they are inadequate for individual planning.

People are not average. Health, lifestyle, income, education, family history, and access to medical care are all factors that influence how long people live. Two people of the same age can have very different longevity outcomes.

This uncertainty has grown more significant as retirement income has shifted away from traditional pensions and toward defined-contribution plans such as 401(k)s and IRAs. Unlike pensions, which typically provide lifetime income, these accounts require individuals to make their savings last. Without a clear understanding of longevity risk, retirees may withdraw too much too soon or live more sparingly than necessary due to fear.

The Role of Longevity Calculators

Longevity calculators aim to close the gap between population averages and individual realities. These tools use actuarial data combined with personal information to predict how long a person will live or the likelihood of reaching certain ages.

Most calculators ask for your age and gender, but some go even further. Some common questions include smoking history, self-rated health, exercise habits, sleep patterns, diet, education level, and income. Some tools also consider diagnosed medical conditions or basic clinical measurements such as blood pressure.

According to research, self-assessed health is one of the most reliable predictors of longevity. People who describe their health as excellent or very good live significantly longer than those who rate it as poor. Lifestyle choices such as quitting smoking, maintaining a healthy weight, and staying physically active all correlate with a longer life expectancy.

However, no calculator can provide certainty. These tools are better suited as guides than guarantees. They provide perspective, helping individuals avoid the common tendency to underestimate how long retirement may last—particularly among people in their 50s and 60s who are making critical planning decisions.

Common Planning Mistakes Around Longevity

One common mistake is assuming that one’s personal lifespan will be similar to that of their parents or grandparents. While family history is important, it does not fully account for medical advances, improved treatments, and changes in living standards that have gradually increased life expectancy over time.

Another issue is overly simplistic assumptions in financial projections. Some retirement projections assume that everyone will live to a specific age, such as 90 or 95. While this approach is simple to model, it ignores a wide range of potential outcomes. For some people, planning only to age 90 may be dangerously optimistic; for others with serious health issues, it may be overly conservative.

Longevity assumptions also play an important role in Social Security claim decisions. Claiming benefits early leads to permanently lower monthly payments, whereas delaying benefits increases lifetime income for those who live longer. Retirees who do not conduct a thorough longevity analysis risk missing out on significant guaranteed income.

Balancing Optimism and Realism

There is also a risk at the opposite end of the spectrum. Some longevity calculators may overestimate life expectancy for people with multiple positive health factors by adding years for each good habit. In reality, when individual behaviors are considered together, their impact is frequently more modest.

This is why using calculators in conjunction with professional guidance, in our opinion, works best for long-term planning. A financial advisor can help interpret results, stress-test plans under various scenarios, and ensure that assumptions are neither overly pessimistic nor unrealistically optimistic.

What Longevity Means for Your Retirement Strategy

Planning for a longer life frequently requires significant changes to one’s retirement strategy. These may include increasing savings during peak earning years, working for a few more years, or adjusting investment allocations to support long-term growth.

Longevity assumptions influence withdrawal strategies. A portfolio designed to last 20 years appears very different than one designed to last 30 or 35 years. As the length of potential retirement grows, healthcare planning, long-term care considerations, and inflation protection become increasingly important.

Perhaps most importantly, longevity planning enables retirees to make informed and confident decisions. Knowing that a plan has been designed to last a long time can provide peace of mind and alleviate concerns about retirement spending.

Why Professional Guidance Matters

While online calculators are useful, they cannot replace a comprehensive financial plan tailored to your specific needs. Longevity is linked to taxes, investment risk, Social Security, medical costs, and estate planning. Changes in one area frequently affect others. Grimes Financial Group takes a holistic approach, incorporating longevity analysis into a larger retirement plan. We also work closely with clients to learn about their retirement needs, goals, and concerns.

Take the Next Step Toward Confidence

Nobody can predict the future with certainty, but careful planning may significantly improve your chances. Understanding how long your savings may need to last is one of the most important steps you can take to ensure financial security in retirement.

If you are approaching or have already retired and want more clarity on longevity, income planning, and Social Security decisions, contact Grimes Financial Group. We are based in Columbus, Ohio, and specialize in assisting individuals and families in navigating retirement with confidence and purpose.

*Source: The Wall Street Journal