Retirement can feel like a finish line, but for many, it’s more accurately the start of a multi-decade journey. Thanks to longer life expectancies, a typical retiree today may need to plan for 25–30 years or more without a paycheck. While a long life is a blessing, it brings to light an important financial challenge: longevity risk, the very real possibility of outliving your savings.
Why Longevity Risk Matters
Longevity risk isn’t just a theoretical concern. It has real consequences for retirees’ lifestyles, choices, and peace of mind. Running out of money late in life can force difficult decisions like cutting back on essentials, delaying medical care, or sacrificing experiences you had looked forward to in retirement.
Even small miscalculations in savings, spending, or investment returns can accumulate over decades. Inflation, market downturns, and unexpected health expenses can slowly erode your financial security if your plan isn’t designed to last. In other words, it’s not just about how much you have at retirement. It’s about how well your income can weather the long, unpredictable journey ahead.
Start With a Realistic Income Plan
The foundation of any long-term retirement strategy is understanding how much income you will need and how long it must last. Begin by estimating your personal life expectancy using tools like online calculators or health assessments. Factor in your lifestyle, health, and family history, then overlay projected living costs, including housing, healthcare, travel, and day-to-day expenses.
Once you have a target, it’s easier to map out how much you’ll need to save, where to invest, and when to begin drawing down your portfolio. For many, planning for a 30-year horizon requires a mix of aggressive savings and strategic spending to ensure flexibility.
Maximize Reliable Income Streams
Social Security remains a critical pillar of retirement income. Timing your benefit can make a substantial difference. For example, delaying your claim from early retirement age to 70 can significantly increase your monthly payments, potentially by 70% or more compared with claiming at 62, depending on your full retirement age. For couples, creative strategies, such as staggered claims, can amplify lifetime benefits and ensure a more stable foundation.
Beyond Social Security, consider sources of guaranteed income. Annuities, particularly longevity-focused products, can offer steady payouts in the later decades of life. While not appropriate for everyone, even a partial allocation can reduce the stress of market swings and provide peace of mind for essential living expenses.
The Bucket Approach: Balancing Safety and Growth
While guaranteed income is important, you’ll still need a portion of your portfolio to grow over time. This is where the bucket strategy comes in. Divide your assets into three categories: cash for short-term needs, bonds for intermediate stability, and stocks for long-term growth. This method allows you to meet immediate expenses without tapping growth assets in a down market, preserving your portfolio’s longevity.
Flexibility is Key
No plan survives unchanged for 30 years. Life and markets will fluctuate, so your withdrawal strategy must be adaptable. The old 4% rule is a useful guideline, but retirees benefit more from a dynamic approach: spending less in lean years and allowing your portfolio to recover, while taking advantage of good years to enjoy life.
Part-time work or phased retirement can also serve as a buffer. Even light income can reduce pressure on savings, help maintain a sense of purpose, and offer flexibility if unexpected costs arise.
Healthcare and Long-Term Care Planning
A long retirement inevitably intersects with healthcare. Roughly 70% of Americans over 65 will need long-term care at some point, yet Medicare offers limited coverage. Planning ahead through long-term care insurance, hybrid life insurance policies, or health savings accounts (HSAs) can protect your assets while covering potential medical costs. HSAs, in particular, offer triple tax advantages and can grow alongside your portfolio.
Mind Your Spending and Taxes
Longevity planning isn’t only about income. It’s also about controlling expenses and managing taxes. Maintaining a lean budget can give you flexibility to adjust withdrawals, weather market downturns, and cover unexpected costs. Tax-efficient withdrawals from retirement accounts, combined with strategic relocation or investment choices, can preserve more of your money for the decades ahead.
Designing Retirement for the Long Game
While longevity risk is often framed as a threat, it can also be an opportunity to plan for a life of purpose, connection, and flexibility. Retirement income planning is not just about avoiding the risk of running out of money. It is about designing a strategy that supports the lifestyle and goals you want throughout every stage of retirement.
At Abeona Wealth, we help clients create retirement income plans that reflect both today’s priorities and tomorrow’s possibilities. Our approach integrates sustainable income planning, investment management, tax-efficient strategies, and risk protection into a cohesive plan. We also help clients coordinate their broader financial picture, including legacy planning, insurance, and family goals, to ensure long-term financial security and alignment with personal values.
If you are thinking about how to make your retirement last both financially and personally, we can help you build a plan designed for the long view, so your money supports not just your needs but the life you want to live. Get in touch to start the conversation.