Here’s a number worth sitting with: if you’re 65 and in decent health today, there’s roughly a 25% chance you’ll live past 90. For couples, the odds that at least one spouse does are significantly higher.
Most retirement plans still end at 85.
That gap, between how long you planned for and how long you might actually live, is what actuaries call longevity risk. It’s one of the hardest retirement risks to see coming because it doesn’t arrive like a market crash or a surprise medical bill. It shows up as a slow arithmetic problem: five or ten extra years of expenses that your portfolio wasn’t built to cover.
This page covers what life expectancy actually means for retirement planning, what the actuarial data shows for people approaching retirement age, and the one financial product specifically designed to eliminate longevity risk entirely.
What Is Life Expectancy?
Life expectancy, known as “actuarial age” in the insurance industry, describes the average number of years a person is expected to live.
It is one of the most important inputs in both retirement planning and insurance pricing.
Insurance companies use life expectancy to price life insurance policies and annuities, while retirees use it to estimate how long savings may need to last.
According to the Congressional Budget Office, life expectancy continues to rise. For the 2045 to 2054 period, CBO projects life expectancy at birth to average 81.7 years and life expectancy at age 65 to average 21.4 years.
The Number That Matters: Life Expectancy at 65
Life expectancy at birth is the life expectancy figure that gets the most attention. It’s currently 79.0 years in the U.S., according to the CDC. Unfortunately, it’s the wrong number for retirement planning.
It’s dragged down by childhood mortality, early-life accidents, and deaths during working age. Once you’ve made it to 65, the relevant question isn’t how long the average American lives. It’s how long the average 65-year-old has left to live.
The difference is substantial. According to the Social Security Administration’s most recent actuarial life table, a 65-year-old man can expect to live another 17.5 years, while a 65-year-old woman can expect to live another 20.1 years.
Those are averages — and by definition, many people live longer.
Life Expectancy From Current Age
| Current Age | Male, Years Remaining | Female, Years Remaining | Combined (Approximate) |
| 60 | 21.1 | 24.1 | 22.6 |
| 65 | 17.5 | 20.1 | 18.8 |
| 70 | 14.1 | 16.3 | 15.2 |
| 75 | 10.9 | 12.7 | 11.8 |
| 80 | 8.1 | 9.5 | 8.8 |
There are two important things these averages don’t show:
- First, averages understate upside. A meaningful share of healthy 65-year-olds will live into their 90s, and a significant minority will reach 95+.
- Second, these are period life expectancy figures, which assume current mortality rates stay frozen. Cohort life expectancy, which accounts for continued medical and public-health improvements, is often longer.
For retirement planning, that means the honest planning horizon usually isn’t “to 85.” It’s often “to 95, with a real chance of longer.”
What Longevity Risk Means for Your Money
Longevity risk is not theoretical. It has a very specific effect on retirement plans, and it compounds with two other major risks: sequence-of-returns risk and inflation.
Consider a $1 million portfolio at age 65 using the classic 4% rule. That means withdrawing $40,000 in year one, then adjusting upward for inflation each year after that. What happens depends heavily on how long the portfolio must last.
- If Retirement Ends at 85 (20 Years)
- The 4% rule succeeds in the overwhelming majority of historical return sequences. This is the scenario many retirement plans are implicitly built around.
- If Retirement Ends at 90 (25 Years)
- The plan is still workable in many cases, but failure risk begins to climb — especially if retirement starts during a bear market.
- If Retirement Ends at 95 (30 Years)
- Failure rates rise materially. A poor early market sequence plus three decades of withdrawals can exhaust even a well-funded portfolio.
- If Retirement Ends at 100 (35 Years)
- Most portfolios require either significantly lower withdrawal rates or structural guaranteed income to survive. That’s the planning gap.
A plan that works “on average” often fails precisely for the retirees who live the longest, which is usually the opposite of how people want risk distributed.
The traditional responses are:
- Withdraw less
- Work longer
- Take more investment risk
Each comes with tradeoffs. There is also a fourth response, one specifically designed to transfer longevity risk rather than manage it.
The One Financial Product Designed To Eliminate This Risk
A lifetime income annuity, structurally, a single-premium immediate annuity (SPIA) or a deferred income annuity (DIA), is the only financial product that shifts longevity risk away from the retiree entirely.
The insurance company takes on the obligation to keep making payments for as long as the annuitant (or annuitants, on a joint-life policy) is alive, regardless of how long that turns out to be.
The mechanism is worth understanding because it’s also why lifetime annuities can pay more per dollar than a retiree can safely withdraw from a portfolio.
Insurance companies pool longevity risk across thousands of policyholders. Policyholders who die early effectively subsidize the payments to policyholders who live long, a transfer actuaries call mortality credits.
This pooling is the structural advantage. No individual portfolio, no matter how well managed, can generate mortality credits, because there’s no pool.
How the Main Structures Handle Longevity
There are multiple annuity structures, each of which handles longevity differently. Here are three main options.
- Single-premium immediate annuity (SPIA). You put a lump sum in, and get lifetime income out, starting within 30 days. This is the simplest structure, and it fits retirees who are at or past retirement age and want to convert a portion of savings directly into a paycheck.
- Deferred income annuity (DIA). You put a lump sum in, and take lifetime income out, starting at a later date of your choosing— commonly age 75 or 80. Because the insurer defers payments and earns mortality credits on those deferred years, DIAs pay significantly more per premium dollar than SPIAs when purchased earlier. DIAs are designed specifically for the longevity problem because they cover the back end of retirement.
- Qualified longevity annuity contract (QLAC). This is a specific type of DIA held inside qualified retirement accounts like an IRA or 401(k). Current IRS rules allow deferred income payments as late as age 85 and also permit RMD deferrals on the QLAC portion of the account.
The Tradeoff of Annuitization
While annuities are an effective way to manage longevity risk, there are tradeoffs worth considering. Specifically:
- Annuitization converts a liquid lump sum into an illiquid income stream. Once annuitized, the principal is generally not accessible.
- The payment depends on the financial strength of the issuer (partially backstopped by state guaranty associations, which typically guarantee up to $250,000–$500,000 per person per insurer).
- Life annuities require you to give up the possibility of leaving an unused portion to heirs — unless a period-certain or joint-life feature is added, which lowers the monthly payment.
Most financial planners don’t recommend annuitizing an entire portfolio. The more common recommendation is to annuitize enough to cover the gap between guaranteed income (such as Social Security or pension income) and essential expenses to create a floor and leave the rest invested for growth, liquidity, and legacy.
How Do Insurance Companies Use Life Expectancy Data?
In the insurance industry, actuaries compile statistical data for analysis. Actuaries are professionals who use modeling software to forecast the probability of specific events and, in life insurance, estimate an individual’s lifespan. They leverage mathematics and financial theory to determine a person’s actuarial age.
Insurance companies also consider your personal situation. They may require you to undergo a medical exam before approving you for a policy and will look at other specific factors that influence a person’s life expectancy.
For example, in the life insurance business, whether an individual proposed for coverage is a smoker or not becomes a significant determining factor when deciding on the premium.
Is An Annuity Right For You?
Influential Factors on Life Expectancy
Life expectancy estimates don’t account for factors such as lifestyle choices or an individual’s family health history. Here are some key factors that could affect how long you’ll live.
- Sex
- Those assigned female at birth generally live longer than men, based on historical data.
- Lifestyle
- Your environment and your choices impact your health and longevity. Habits, including smoking and alcohol use, and obesity, may shorten your lifespan.
- Current Health
- The state of your health now can affect how long you live.
- Family History
- If your family has a history of heart disease, cancer, or diabetes, you may have a higher risk of premature death.
- Other factors
- Geography, socioeconomic status, and access to health care may also influence one’s lifespan. Pending surgeries or missed follow-up doctor appointments may play a role in determining coverage, particularly in the life insurance category.
Frequently Asked Questions
Longevity risk is the risk of living longer than expected and outlasting your retirement savings. In retirement planning, it refers to the possibility that your income, investments, and withdrawal strategy won’t last as long as you do.
Women in the U.S. live significantly longer than men on average. According to the latest Centers for Disease Control and Prevention data for 2024, female life expectancy at birth was 81.4 years, compared with 76.5 years for males, a difference of 4.9 years.
At age 65, women were expected to live 20.8 more years, versus 18.4 years for men, a gap of 2.4 additional years. This difference is one reason retirement income planning often looks different for women, especially when it comes to survivor benefits and long-term care costs.
Lifestyle can materially change retirement planning assumptions because it affects both lifespan and healthcare costs. People who don’t smoke, maintain a healthy weight, stay active, manage chronic conditions, and have strong preventive care habits often live longer than average and may spend more years in retirement.
Your chances of living to 95 depend on many factors, including your current age, health, and sex. The Social Security Administration estimates a 65-year-old has a one-in-10 chance of living until 95.
Still have questions?
