Why, and How, to Plan for Longevity

by Donald C. Schultz

When creating a long-term investment strategy, you need to think about your goals, circumstances, risk tolerance and liquidity needs. But you should also place considerable weight on one other factor: your projected longevity.

Your estimated life span can help determine how much you need to save and invest, how much you can afford to withdraw each year from your retirement accounts, how much insurance to carry, and how much you may be able to leave to your family.

Of course, none of us can say for sure how long we will live. We might look at our family history of longevity and our own health status for clues. But a growing body of evidence suggests a lot of us are actually underestimating how long we are going to be around.

Life spans are going up

According to the National Center for Health Statistics, a 65-year-old man is expected to live another 19.5 years, on average, and a 65-year-old woman can anticipate living another 20.7 years. Compared to an average American life expectancy of 68.2 years in 1950, these numbers indicate a clear trend toward greater longevity. For further proof, the population of U.S. centenarians (those reaching 100 years of age) is expected to quadruple over the next three decades, according to a 2024 Pew Research Center report.

Given these facts, you might want to review your portfolio to determine if it is well-positioned to help sustain you for a longer lifetime than you may once have envisioned – keeping in mind that investing successfully for longevity is more than a matter of how much you invest. You may also want to reevaluate how you are investing.

During your retirement years, when you rely on some of your investments for income, you need growth potential in your portfolio as well. Growth may help you prepare for a longer time horizon.

Costs are going up too

Until recently, inflation had been low for several years. But even at a relatively low 3 percent inflation rate, prices double roughly every 25 years. Depending on your personal needs, your spending may go up over time. For example, you may pay for more doctor’s office visits and prescriptions to help you stay healthy as you get older.

To help your purchasing power keep up with inflation, you should revisit your asset allocations and consider diversifying your portfolio with investments that may provide the growth you need for a longer retirement.

By planning for greater longevity, you can help yourself feel more confident about your ability to enjoy a long and happy retirement.

This article is provided by Donald C. Schultz, a Financial Advisor at RBC Wealth Management. The information included in this article is not intended to be used as the primary basis for making investment decisions. RBC Wealth Management does not endorse this organization or publication. Consult your investment professional for additional information and guidance.

RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC