Will My Money Outlive Me? Longevity Risk, Explained
Longevity risk is the chance you live longer than your money lasts. It is the one retirement risk that makes every other risk worse, because a longer life means more years of inflation, more market cycles, and more withdrawals. Planning to average life expectancy is planning for a coin flip, since roughly half of people live past it.
Imagine you have been hired to build a bridge across a canyon, and nobody can tell you how wide the canyon is. You are given a good estimate, an average of similar canyons, and you are told the real number will be revealed only after you finish building. Build to the average and there is a meaningful chance the bridge stops short of the far wall.
That is the actual math problem of retirement. You are funding a span of unknown length. Every other decision, how much to withdraw, how much to keep in stocks, when to claim Social Security, depends on a number you cannot know: how many years the money has to cover.
Longevity is a wonderful problem to have and a genuinely hard one to plan around. The good news is that it is a known problem with known tools, and the first tool is simply looking at the real numbers instead of the one most people carry in their heads.
What is longevity risk?
Longevity risk is the financial risk of outliving your assets, and it is different from the risk of poor returns because it compounds everything else. A bad market year is a size problem. An extra fifteen years of life is a duration problem, and duration multiplies every other exposure you have.
Longevity risk
Why it is different
Who feels it most
What are the odds of living to 90?
Roughly one in three 65-year-olds today may live past age 90, and about one in seven may live past 95, according to the Social Security Administration’s 2026 retirement guidance for Medicare beneficiaries (SSA Publication No. 05-10529). Those are not exotic outcomes. They are ordinary outcomes that most plans quietly assume will not happen.
The same life tables put average remaining life expectancy at age 65 at 18.9 years, for a total of about 83.9 years, based on 2022 mortality conditions. Broken out by sex, the 2022 tables show roughly 17.5 more years for men at 65 and 20.2 for women.
Two things to hold onto. First, those figures already exclude everyone who died before 65, which is why life expectancy at 65 is higher than the figure you see quoted at birth (77.5 years total in the same 2022 tables). Second, an average is the middle of a distribution, not a ceiling.
Why is average life expectancy the wrong planning number?
Average life expectancy is the wrong planning number because roughly half of people live longer than it, and you do not get to find out which half you are in until it is too late to adjust. If you fund exactly to the average, you have built a plan with something close to a coin-flip failure mode.
The couples problem nobody accounts for. For a married couple, the number that matters is not either person’s life expectancy. It is the longer of the two, because the household still needs income until the second person is gone. Two independent 65-year-olds each have their own odds of reaching 90, so the chance that at least one of them does is meaningfully higher than either one alone. A plan built on the first spouse’s life expectancy underfunds the survivor’s years, and the survivor is usually also facing a drop in household Social Security income when one benefit stops.
There is a second reason averages mislead. Life expectancy figures are population averages across everyone, including people in poor health. If you are healthy at 65, a non-smoker, with long-lived parents, your personal distribution sits to the right of the population’s. That is good news you have to plan around, not good news you can spend.
A retirement plan is not a prediction. It is a structure that has to survive being wrong.
The AnnuaLife Team
How long should my plan actually run?
Most planning work runs to age 90 or 95 rather than to life expectancy, and for a couple it runs to the later of two lives. Here is how to set your own horizon without guessing.
Start at your current age, not at 65
Use the tables for the floor, not the target
Add a buffer for the tail
For couples, use the second death
Stress the number, do not just set it
What makes longevity risk worse?
Longevity risk rarely acts alone. It amplifies three other exposures, and the combination is what actually drains portfolios.
| Risk | What it does on its own | What longevity does to it |
|---|---|---|
| Inflation | Erodes purchasing power each year | Twenty-five years of even modest inflation compounds far more than ten |
| Sequence of returns | A bad market early in retirement is harder to recover from | More years means more chances to hit a bad sequence at a vulnerable moment |
| Health and care costs | Rise later in life, often unevenly | The longest lives concentrate the highest-cost years at the end |
| Withdrawal pressure | Each withdrawal shrinks the base | More years of withdrawals from a smaller base each time |
Sequence risk deserves its own mention because it is the one people underestimate most, and we have written about it in detail in our guide to sequence of returns risk. Two retirees can earn the identical average return and end up in completely different places based only on the order the returns arrived.
How do people actually manage longevity risk?
There are four honest tools, and most good plans use more than one. None of them is free, and each of them trades something you value for something you value more.
Delay Social Security
Spend flexibly
Hold more in safe assets
Buy lifetime income
Where does an annuity fit, and where does it not?
A lifetime income annuity fits the specific job of covering essential spending for as long as you live, and it does not fit money you may need to reach. It is the only private tool that pays regardless of how long you last, which is exactly the risk this article is about, and that is also the entire extent of its usefulness here.
Payout rates rise with age because the insurer expects to make fewer payments. On the AnnuaLife immediate annuity rates board, last updated July 29, 2026, the best available quotes across surveyed A-rated carriers for a single-life immediate annuity with income starting about a month after purchase were roughly $679 per month for a 65-year-old man and $649 for a 65-year-old woman on a $100,000 premium, rising to about $882 and $818 respectively at age 75. Those are dated illustration figures, not quotes, and they change without notice. Current figures live on the immediate annuity rates page.
- It fits when a specific set of monthly bills has to be covered for life and Social Security does not cover them.
- It fits better later than earlier for many people, because payouts increase with age and you spend fewer years with the money committed.
- It does not fit emergency money, money earmarked for a purchase, or money you may need in a lump.
- It does not fit if your guaranteed income already covers your essentials comfortably.
- A deferred income approach, including a qualified longevity annuity contract, targets the tail specifically by starting payments in your eighties. Our QLAC page explains how that structure works.
The honest counterweight: committing money to a lifetime income contract means giving up access to it, and a level payment loses purchasing power over a long retirement unless you pay for an increasing option, which lowers the starting payment. If you die early, a single-life contract with no refund feature pays nothing further. Those are real costs, and anyone who does not name them is not giving you the whole picture.
Moving forward
You cannot know the width of the canyon. You can decide to build past the estimate, and you can decide which part of the span you want anchored to something that does not depend on how long the trip takes. Most people do not need to insure their whole retirement against longevity. They need to make sure the essentials are covered no matter what, and let the rest of the plan carry the variability.
A good first step is arithmetic rather than a product. Our annuity payout calculator shows what a given amount of premium translates to in monthly income at your age, which turns an abstract worry into a number you can compare against your bills. From there, our page on income annuities explains the mechanics, and our guide to building a retirement income floor shows how the pieces fit together. If you want to start by sizing the shortfall itself, our guide to the retirement income gap is the place to begin.
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