Americans are living longer than previous generations, forcing advisors to rethink retirement plans built around a traditional
According to the nonprofit, nonpartisan Pew Research Center, there were 2,300 Americans age 100 or older in 1950. By 1990, that number had climbed to 37,000, and by 2024, it had reached 101,000.
Pew estimates that by 2054, 513,000 Americans — about 14 out of every 10,000 people — will be at least a century old. Meanwhile, 67% of Americans fear they will
For advisors, these aren't just data points but a planning gap that needs to be addressed.
"We are still applying a 20- to 25-year solution to what I believe will be a 40- to 50-year problem," said Salvatore "Sal" Capizzi, chief sales officer of San Diego-based hybrid RIA Dunham & Associates Investment Counsel in an interview. "Our thinking of how we're working with retirement has to be completely uprooted."
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Longevity is reshaping retirement assumptions
Capizzi credits lifestyle changes, along with medical and scientific advances, as some of the primary drivers increasing longevity.
The challenge for advisors is not just that clients are living longer. They're also remaining active and independent at advanced ages, extending both the duration and cost of retirement. Capizzi says he knows three active people over the age of 100.
"They're not sitting there in a nursing home," he said. "They're at home. They go shopping."
Research from the TIAA Institute, the independent research arm of TIAA, shows that over a 100 year-period, post-retirement life expectancy at age 65 has increased significantly for both men and women. Women born in 1923 could expect, on average, to live about 12.2 years after age 65, while men born that same year could expect to live 11.5 years after 65. Fast-forward 100 years to 2023: Women born that year are projected to live 19.9 years after 65; men, an estimated 17.4 years.
Longer retirements increase the likelihood that clients will face more financial pressures —
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Working longer becomes part of the longevity plan
As retirement horizons lengthen, advisors are increasingly focused on strategies to extend portfolios' longevity.
The TIAA Institute recommends encouraging clients to focus on retirement income rather than accumulated wealth. The institute also points to delaying Social Security, stress-testing portfolios and incorporating sources of guaranteed lifetime income as ways to address longevity risk.
Capizzi said advisors should also challenge the assumption that retirement begins and ends at age 65.
Both he and the TIAA Institute suggest that near-retirees consider a career downshift instead of outright retirement from the workforce. In this model, pre-retirees balance downtime and leisure activities with part-time work, generating enough income to reduce pressure on portfolio withdrawals.
"There's a concept of encore in retirement," said Capizzi. "There are certain things that you were really good at, and what you do is you're just applying that on a part-time basis."
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Stress-testing for a retirement that could last many decades
For advisors, longer life expectancies make ongoing planning and course correction increasingly important.
Flavio Landivar of Evensky & Katz Wealth Management in Coral Gables, Florida said he focuses on building a client's plan and revisiting it annually to ensure everything is still on track.
If adjustments become necessary, options may include spending less, tapping home equity, downsizing or selling illiquid assets. Landivar said the primary goal is accounting for inflation while preserving a client's standard of living over time.
Scott Van Den Berg of Austin, Texas-based Century Management said longevity planning begins with understanding how clients want to live their life, rather than focusing first on investments.
When meeting with clients, he segments spending into client needs, wants and wishes.
"If we can fund a client's needs through difficult scenarios, then we can confidently build in the wants and wishes," he said.
To prepare for longer retirements, Van Den Berg stress-tests portfolios against inflation, health care costs, long-term care expenses, lower market returns and the possibility of reduced Social Security benefits. He also models scenarios in which one spouse significantly outlives the other.
"People want to enjoy life, maintain their independence and be cherished, not merely tolerated, as they grow older," said Van Den Berg. "To me, that's what retirement planning is really about. The goal isn't simply to make your money last. It's to help ensure your money supports the life you want to live for as long as you live it."
