Longevity Risk Planner

The standard retirement-planning question — “when can I retire?” — assumes you know how long retirement lasts. You don't. A 65-year-old American woman has a roughly 50% chance of reaching 87, a 25% chance of reaching 92, and roughly an 8-10% chance of reaching 100. The difference between “plan to 85” and “plan to 95” is enormous: ten more years of inflation-adjusted spending, ten more years of healthcare and long-term-care exposure, ten more years for sequence-of-returns risk to materialize.

Step 1: personalize the table. SSA actuarial tables tell you the average for your age and gender. The average isn't you. Smoking subtracts about 5 years. Obesity subtracts 2-3. Multiple chronic conditions stack. Regular exercise adds 2-4. A healthy diet adds 2. Family longevity (parents past 85) adds 2. Stack the adjustments and your personalized median can shift by ±10 years from the actuarial baseline.

Step 2: simulate, don't average. The average return on a 60/40 portfolio over the last century is ~7-8%. The sequence of returns matters far more than the average. A bad early-retirement decade with a 4% withdrawal rate can leave you broke at 85 even with a positive average lifetime return. Monte Carlo replaces the “average” with the distribution — and the distribution is what you actually live through.

Step 3: hedge what you can't outlive. Longevity insurance is the technical term for income that keeps paying no matter how long you live. Four common forms:

• Delay Social Security to 70. The cheapest and most powerful longevity hedge: each year delayed past FRA adds 8% inflation-protected income for life. From age 67 to 70 that's 24% more guaranteed real income. No fees, no insurance company, government-backed.
• QLAC (Qualified Longevity Annuity Contract). Use up to 25% of your IRA (capped at $200K in 2026) to buy an annuity that starts paying at 80 or 85. Defers RMDs on that money and creates a future-income floor.
• DIA (Deferred Income Annuity). Same idea outside the QLAC structure. Pay a lump sum now, get a guaranteed income stream starting in 10-25 years.
• Conservative bucket reserve. Set aside 5-10 years of expenses in safe assets (TIPS ladder, cash) to protect against being forced to sell equities in a down market past age 85, when you have less recovery time.

None of these are right for everyone. Higher-confidence health, lower expenses, and a substantial portfolio cushion mean you may not need any of them. Lower-confidence health with elevated expenses and a thinner portfolio means your ruin probability is the most actionable number on this page — and one of these hedges is probably the right answer.