Longer lives force advisors to rethink retirement plans

Americans are living longer and financial advisors say many retirement plans still assume a 20- to 25-year time horizon rather than a 40- to 50-year span. The U.S. had 101,000 people aged 100 or older in 2024 and projections show about 513,000 by 2054.

Historical data trace a steady rise in centenarians. In 1950 there were about 2,300 Americans age 100 or older; by 1990 the number was roughly 37,000. A recent survey finds 67% of Americans fear they will outlive their savings.

Research on life expectancy at age 65 shows notable increases over a century. For people born in 1923, projected years lived after 65 were about 12.2 for women and 11.5 for men. For those born in 2023, projections rise to about 19.9 years for women and 17.4 years for men. Longer retirements extend exposure to inflation, rising medical costs and market swings, factors advisors say can strain plans based on shorter lifespans.

Salvatore “Sal” Capizzi, chief sales officer at Dunham & Associates Investment Counsel, warned that many planners continue to apply a shorter time frame. “We are still applying a 20- to 25-year solution to what I believe will be a 40- to 50-year problem,” he said. He described an “encore” model in which people move to part-time or flexible work to reduce pressure on savings.

Advisors and researchers propose several planning changes. Recommendations include delaying Social Security to raise lifetime guaranteed income, stress-testing portfolios against prolonged low returns and higher health costs, and adding guaranteed income products where appropriate. Planners say more frequent reviews and deeper scenario modeling can identify adjustments early.

In practice, advisors review client plans annually and consider non-investment options if funding gaps appear. Possible responses include reducing spending, tapping home equity, downsizing or selling illiquid assets. Financial planners also urge beginning retirement conversations with clients’ lifestyle goals, then mapping spending into needs, wants and wishes to prioritize essential expenses.

Advisors run stress tests that model higher health-care and long-term care costs, extended low market returns and the financial impact if one spouse outlives the other by many years. Those exercises inform decisions about guaranteed income, tax planning and how long clients may need to work.

As more people remain active and independent at advanced ages, advisors report a shift toward income-focused strategies and ongoing plan maintenance. The emphasis is on adjusting assumptions and tools to match longer lifespans and the costs those lifespans can bring.