How to Make Your Money Last as Long as You Do

How long should you plan to live?

No one can really know, of course. But the answer to that question may be the most critical factor in making a successful financial plan for retirement.

Fewer baby boomer retirees — Americans born between 1946 and 1964 — have traditional pensions than their parents generation did, which means they will need to retire on income from Social Security and savings. At the same time, expected longevity for men and women at age 65 has jumped more than 10 percent since 2000, according to the Society of Actuaries. Men who reach age 65 can be expected to live to an average age of 86.6, and women to 88.8.

And those figures are only averages, said Vickie Bajtelsmit, a professor of finance at Colorado State University whose research focuses on retirement and financial planning. Working with Social Security Administration mortality data, Professor Bajtelsmit calculated that a 65-year-old man has a 20 percent chance to live to 90, and the odds jump to 30 percent if he is in better-than-average health.

Meanwhile, she concluded, 31 percent of women who reach age 65 will make it to 90. And for those with better health, the figure is 42 percent.

– New York Times

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