Understanding Longevity and Its Impact on Retirement
One of the most significant changes shaping retirement planning today is longevity. People are living longer, healthier lives than ever before. According to the Social Security Administration, a healthy 65-year-old couple has a high likelihood that at least one spouse will live well into their 90s. While this increased lifespan is something to celebrate, it also introduces new financial challenges.
Longevity risk refers to the possibility of outliving your savings. The longer you live, the more years your retirement income must support your lifestyle, healthcare needs, and personal goals. Traditional retirement models, once built around a 20-year time horizon, now need to account for 30 or even 40 years of retirement spending.
Addressing longevity risk is not just about saving more. It is about structuring a strategy that balances income generation, growth potential, inflation preservation, and flexibility. At Concerto Financial, we help clients explore ways to prepare for this evolving reality, aligning financial decisions with long-term well-being.
Why Longevity Is Reshaping Retirement Planning
Living longer affects nearly every aspect of retirement planning. Increased life expectancy can magnify the effects of inflation, sequence-of-returns risk, and healthcare costs. For instance, even modest annual inflation can significantly erode purchasing power over several decades. A retiree with a $5,000 monthly budget today might need more than $9,000 per month to maintain the same standard of living 30 years from now.
Additionally, market volatility can have a greater impact over longer timeframes. Withdrawals during downturns early in retirement can permanently reduce the amount of capital available to grow later. A longer retirement amplifies the need for diversification, steady income streams, and disciplined distribution strategies.
Longevity also brings lifestyle considerations. Many retirees want to remain active, travel, or pursue new interests. These pursuits create meaningful experiences but also add to long-term spending needs. A strategy that anticipates these personal goals is essential for sustaining financial confidence over time.
Step One: Estimate How Long Your Retirement Might Last
No one can predict exactly how long they will live, but estimating life expectancy can provide a helpful foundation for planning. Longevity calculators and actuarial tables can help project an average lifespan based on health, family history, and lifestyle. However, when building a financial plan, it is generally better to err on the side of caution and plan for a longer life.
For example, if you anticipate retiring at age 65, planning for income through age 95 or beyond may provide an added margin of safety. This longer horizon encourages a more sustainable withdrawal rate and helps ensure that your resources remain sufficient even in the later stages of retirement.
A personalized plan should also reflect individual health conditions, spousal age differences, and income sources such as pensions or annuities. At Concerto Financial, we help clients analyze these factors to design strategies that address both the expected and the unexpected.
Step Two: Balance Growth and Income
When retirement lasts 30 years or more, maintaining some level of portfolio growth remains important. Too much exposure to conservative investments can cause your savings to lose ground to inflation, while too much risk may create unnecessary volatility during market downturns.
A diversified mix of assets designed with the goal of balancing growth potential and income stability can help retirees navigate this challenge. Equities can provide long-term growth, while fixed income investments can help moderate risk and provide consistent cash flow. Some retirees also incorporate alternative investments or dividend-paying equities for added diversification.
The right mix depends on your personal goals, time horizon, and comfort level with market fluctuations. Rebalancing periodically and reviewing allocations can help your portfolio remain aligned with your evolving needs.
Step Three: Build Reliable Income Streams
A well-structured retirement plan often includes multiple income sources that complement each other. Social Security, pensions, investment withdrawals, and possibly annuity income can each play a role. The key is to create a reliable foundation of income that supports essential expenses while allowing for flexibility in discretionary spending.
Social Security remains a cornerstone for many retirees. The age at which you begin benefits can significantly impact your monthly income. Delaying benefits until age 70, for example, can increase payments by roughly 8 percent per year beyond full retirement age. For couples, coordinating claiming strategies can help maximize lifetime benefits.
Annuities can also serve as a tool for generating predictable income. While not suitable for everyone, certain types can provide income that lasts for life, helping mitigate longevity risk. For others, laddering certificates of deposit or bonds may offer a more conservative approach to steady income.
Each option carries its own advantages and trade-offs. The goal is to blend them in a way that supports both near-term needs and long-term security.
Step Four: Plan for Healthcare and Long-Term Care Costs
Healthcare costs are one of the most significant and unpredictable aspects of retirement. Fidelity estimates that a 65-year-old couple retiring in 2025 may spend over $350,000 on healthcare over their lifetime, excluding long-term care. These costs can rise faster than general inflation, making it vital to plan ahead.
Medicare provides important coverage, but it does not pay for everything. Premiums, copayments, dental and vision care, and prescription drugs can all add up. Supplemental insurance or Medicare Advantage plans can help bridge the gaps.
Long-term care, such as assisted living or in-home nursing, is another major consideration. Traditional insurance policies, hybrid life insurance with long-term care riders, and self-funding strategies each offer different ways to prepare. Discussing these options early can help protect both your finances and your family from future uncertainty.
Step Five: Account for Inflation and Lifestyle Adjustments
Inflation quietly erodes purchasing power over time, making it one of the most significant threats to long-term retirement security. Even moderate inflation can double the cost of living within two decades. Because retirement can span multiple decades, protecting purchasing power is essential.
One approach is to include investments with growth potential, such as equities, which have historically outpaced inflation over long periods. Treasury Inflation-Protected Securities (TIPS) or other inflation-linked assets may also help maintain real value.
Lifestyle adjustments are another way to maintain flexibility. A plan that allows you to adjust discretionary spending in response to market conditions or inflation changes can provide long-term sustainability. For example, reducing travel or non-essential expenses during years of high inflation can help preserve capital for future needs.
Step Six: Develop a Thoughtful Withdrawal Strategy
A withdrawal plan determines how you will access your savings over time. The goal is to maintain an income stream that supports your needs without depleting your assets prematurely.
One of the most widely discussed frameworks is the “4 percent rule,” which suggests withdrawing 4 percent of your portfolio in the first year of retirement and adjusting annually for inflation. However, this rule may not suit everyone, especially in today’s lower interest rate environment and longer life expectancies.
Dynamic withdrawal strategies, which adjust based on market performance, can provide greater resilience. For example, withdrawing less during down markets and slightly more during strong years can help extend portfolio longevity. Integrating tax efficiency into your withdrawal plan, such as coordinating distributions from taxable, tax-deferred, and tax-free accounts, can further optimize results.
Periodic reviews and adjustments are essential. At Concerto Financial, we help clients monitor withdrawal rates, update projections, and adapt as circumstances evolve.
Step Seven: Incorporate Tax Planning Into Your Retirement Strategy
Tax efficiency plays a crucial role in sustaining retirement income. Without careful tax planning, taxes can significantly reduce your available funds.
Consider how each account type—tax-deferred (like traditional IRAs and 401(k)s), tax-advantaged (like Roth IRAs), and taxable accounts—affects your withdrawal strategy. Spreading withdrawals among different account types can help manage tax brackets and minimize lifetime tax liability.
Roth conversions, charitable giving strategies, and required minimum distribution (RMD) planning are additional tools that can enhance tax efficiency. The right approach depends on your specific income needs, estate goals, and legislative environment.
Because tax laws can change, reviewing your strategy regularly helps address it current regulations.
Step Eight: Address Legacy and Estate Considerations
A comprehensive retirement plan should also include a thoughtful approach to legacy planning. Estate documents such as wills, trusts, and powers of attorney help address that your wishes are carried out efficiently.
For families, longevity can mean multiple generations depending on your resources and decisions. Passing wealth efficiently involves more than just transferring assets. It is also about preserving family harmony and shared values. Discussing your intentions openly can reduce confusion and create clarity among beneficiaries.
Charitable giving, whether through donor-advised funds or planned gifts, can also align with personal values while providing potential tax advantages. A well-structured estate plan ensures that your financial legacy reflects both your intentions and your life’s work.
The Emotional Side of Longevity
Financial planning is not only about numbers. Living longer can bring emotional and psychological shifts. Many retirees experience transitions in identity, purpose, and relationships as they move beyond their careers.
Having a sense of purpose and community contributes to overall well-being and can even influence longevity itself. Pursuing volunteer work, part-time consulting, hobbies, or education can enrich this stage of life. A solid financial foundation can provide the confidence to explore these possibilities, aiming to reduce financial stress.
At Concerto Financial, we recognize that financial health and emotional well-being go hand in hand. Our approach considers both aspects to help clients create a retirement that feels fulfilling and sustainable.
How Couples Can Plan Together for Longevity
For couples, longevity planning involves coordination. Differences in age, health, and retirement timing can affect how long the household’s resources need to last. Planning together helps align expectations and reduces potential stress later.
Key considerations include:
- Coordinating benefit start dates: Social Security and pension options often depend on the timing of each spouse’s retirement.
- Ensuring survivor income: Evaluate how income streams will change if one partner passes away first.
- Balancing investment risk: One spouse may have a longer investment horizon than the other, which can influence portfolio design.
- Aligning healthcare plans: Couples should consider how Medicare and supplemental insurance options interact between partners.
A well-coordinated strategy ensures both individuals feel secure and supported, regardless of life’s uncertainties.
Reviewing and Adjusting Over Time
Even the best retirement plan needs regular updates. Economic conditions, market performance, healthcare costs, and personal circumstances can all change. Reviewing your plan annually helps address your goals and lifestyle.
Consider updating your plan after major life events such as marriage, relocation, or the birth of grandchildren. Periodic adjustments can help maintain balance between growth, income, and risk management.
Ongoing monitoring also allows you to evaluate your withdrawal rate and investment performance relative to your long-term projections. Working with a financial professional provides the added benefit of objective guidance and accountability.
The Role of Professional Guidance
Navigating longevity risk involves complex decisions that go beyond simple budgeting. From asset allocation and tax efficiency to healthcare and estate planning, each element connects to the others. Professional guidance can help you bring these moving parts into a cohesive strategy.
At Concerto Financial, our approach focuses on helping clients address their unique needs through comprehensive, personalized strategies. We work closely with each individual or family to evaluate long-term goals, identify opportunities, and adapt to changing circumstances.
Longevity brings both opportunities and challenges. With the right preparation, your retirement can be a period of independence, fulfillment, and confidence.
Taking the Next Step
Addressing longevity in your retirement strategy starts with a single step—an honest conversation about your goals, values, and priorities. Whether you are approaching retirement or already living it, now is the time to review your plan and make sure it reflects the life you want to live for decades to come.
At Concerto Financial, we help clients pursue confidence through careful planning, disciplined strategies, and ongoing support. Together, we can explore ways to help your resources last as long as you do.
Contact us today to schedule a consultation and begin shaping a retirement strategy that aligns with your vision for the future.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Asset allocation does not ensure a profit or protect against a loss. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
This material was prepared by NLA Media