What Is Longevity Risk in Retirement Planning?

About one in three 65-year-olds may live to 90 or beyond. That figure comes from the Social Security Administration's planning guidance, and it changes how you should think about your own plan. If your plan ends at 85, it is betting against a third of retirees. That is what longevity risk in retirement planning comes down to: the risk that you live longer than your money lasts.

The definition is simple. Dealing with it is harder, because nobody knows how long they will live. This article covers what longevity risk is, how long to plan for, why the published odds disagree, and the part most articles leave out: being too afraid of it costs you something too.

Source: Social Security Administration, Retirement Information for Medicare Beneficiaries · 2026

What is longevity risk in retirement planning?

Longevity risk is the chance that your retirement goes on longer than your savings can support it. Groups like Thrivent and CCFCU define it the same way. The basic tension is that you need to decide how fast to spend before you know how long you will need the money.

What makes this risk unusual is that it is personal. A market crash hits every retiree at the same moment, and so does inflation. Your lifespan belongs only to you. As the MyActuary newsletter puts it, it is retirement planning's biggest unknown. Averages can tell you how a large group will do. They can't tell you which group member you will be.

The fear is common. In Allianz Life's surveys, 63% of Americans in 2024 and 64% in 2025 said they fear running out of money more than they fear death. Inflation was the top reason given, at 54% (ThinkAdvisor, April 2025).

That is a lot of worry. Odds and evidence are a better place to start than worry.

Why most plans are built too short

People tend to underestimate how long they will live, and their plans end up sized for a life that is shorter than likely (PlanSponsor, Clark.com).

The cause is usually a misreading of "life expectancy." Life expectancy is an average. Roughly half of people live past it. If you reach 65, your odds of living well into your late 80s or 90s are better than the number quoted at birth suggests.

If you plan only to your life expectancy, you have planned for a coin flip.

How long should you plan for?

It depends on whether you are planning for one person or two. Most consumer articles use a single horizon for everyone, and that misses a lot.

For a couple, the question that matters is not when one of you dies. It is how long at least one of you will still need income. That joint horizon is longer.

Some writers go further and suggest you assume you'll live to 100. That is the most conservative choice. It has a cost, which comes up below.

Why the published odds don't agree

You will find figures anywhere from about 50% to 75% for what looks like the same question: will one member of a 65-year-old couple reach 90?

These figures don't contradict each other. They come from different inputs:

• Different mortality tables. Some use general population data. Others use data from people who buy annuities or have pensions, and those people tend to live longer.
• Different health assumptions. A healthy, non-smoking couple with good income has different odds from the population average.
• Different years. Projections change as mortality data is updated.

To see numbers closer to your own situation, the American Academy of Actuaries and the Society of Actuaries offer the Actuaries Longevity Illustrator. You enter your age, sex, smoking status and general health, and it estimates your odds of reaching different ages.

Longevity multiplies every other retirement risk

A long life is good news. In financial terms, though, every extra year gives your other risks more time to work on you.

• Inflation. Each additional year of rising prices erodes your purchasing power a little more.
• Health care. Fidelity's 2025 estimate is $172,500 in Medicare premiums, deductibles and prescriptions for one 65-year-old over retirement, and that excludes long-term care. The longer you live, the more of that bill you pay. (Source: Fidelity Investments, 2025 Retiree Health Care Cost Estimate · Jul 2025)
• Sequence of returns. A bad market early in a long retirement is harder to recover from, because withdrawals continue while the portfolio is down (My Investment Insight).
• Withdrawal rate. Morningstar's 2025 research puts a safe starting withdrawal rate at 3.9%, defined as the rate at which money is still left in 90% of simulated outcomes over a 30-year retirement. Note the 30 years. If you retire at 62 and live to 95, you are past that window. (Source: Morningstar, The State of Retirement Income 2025 · Dec 2025)

The other side of longevity risk: spending too little

Most articles skip this part.

If you plan as though you will certainly live to 100, you may spend less than you safely could for 30 years. You skip the trip and turn down the help you could have afforded. The MyActuary newsletter is one of the few sources that names this problem: being so afraid of outliving your money that you live on less than you need to.

Research shows how large the effect can be:

• Michael Kitces showed that an 80% Monte Carlo success rate over a fixed 30-year horizon for a 65-year-old couple works out to more than 96% once you include the real chance of dying before the 30 years are up (Kitces).
• A 2006 academic paper in Financial Services Review found that adding mortality to fixed-horizon models reduced the probability of the portfolio running out by almost 50% (Financial Services Review).

This doesn't mean you should ignore longevity. It means you have two risks to weigh: running out of money and underspending. A good plan keeps you between them.

What a success rate means when lifespan is uncertain

This is where Monte Carlo comes in, explained without jargon.

A Monte Carlo simulation runs your plan through many possible futures. Some have strong markets, some weak. Some have high inflation, some low. It then counts how many of those futures still have money left at the end. The share that do is your success rate.

A success rate always depends on a horizon. "85% of futures stay funded" needs to be followed by "to what age?" The same plan can look comfortable to 85 and tight to 95.

That is why the plan you build at Monte Climb runs to age 95 by default, and you can extend it. We run your savings through 1,000 simulated futures and give you a probability of success. It is a probability, not a promise.

Some useful questions to ask yourself:

1. What is my success rate to 90? To 95? To 100? Watching it change tells you more than any single pass/fail number.
2. Am I planning for one life or two? For a couple, the longer joint horizon matters more.
3. Which way am I wrong? If your result is very high at 95, you may be spending less than you could.

Common ways people manage longevity risk

The approaches that come up most often in the research (Kiplinger, Kiplinger, Professional Planner):

• Delaying Social Security. A larger monthly benefit that is paid for life functions as insurance against a long life.
• Guaranteed lifetime income. Annuities and pensions turn part of your savings into income you can't outlive. They come with trade-offs in cost and flexibility.
• Self-insuring. You keep a larger cushion invested and plan to a longer age.
• Life expectancy plus a buffer. You start from your realistic odds and add years on top.
• Flexible spending. You agree in advance to cut back if markets or your health change.

Which of these suits you depends on your health, your other income, and how much uncertainty you can tolerate. This article is general information, not advice for your situation.

Start with three numbers

Nearly half of workers have never estimated what they'll need each month in retirement. EBRI's 2025 Retirement Confidence Survey found only 52% have done it. (Source: EBRI/Greenwald Retirement Confidence Survey 2025, Fact Sheet 3)

You can do it in under a minute. Enter your age, what you've saved, and what you spend each month. We run those numbers through 1,000 simulated futures in your browser, and nothing is saved until you choose to save it. Then ask William, our AI planner, the follow-up questions: Am I on track? Can I retire at 62? What can I sustainably spend? He shows his work.

Planning software, not advice. A clear starting point, though.

Show my answer →

Frequently asked questions

What is longevity risk in simple terms?

It's the risk that you live longer than your savings can support. Your lifespan is unknown, and that uncertainty makes it hard to know how fast you can safely spend.

How long should I plan for in retirement?

Plan well past average life expectancy, because about half of people outlive it. Social Security says about one in three 65-year-olds may live to 90 or beyond. Many planners use 95 as a default, and couples should plan around the longer joint horizon of whichever spouse survives.

Why is longevity risk higher for couples?

The money has to last as long as either spouse is alive. Kitces puts joint life expectancy for a typical 65-year-old couple at about 89, with an 18% chance that at least one is still alive at 95.

Can you plan too conservatively for longevity?

Yes. If you assume you'll certainly live to 100, you may spend less than you could for decades. Kitces found that an 80% success rate over a fixed 30-year horizon rises to more than 96% once you include the real chance of dying earlier.

How does a Monte Carlo simulation help with longevity risk?

It runs your plan through many possible market futures and reports what share stay funded to a chosen age. If you compare your success rate at 90, 95 and 100, you can see how much your plan depends on how long you live.