Thursday, May 1, 2025

The Retirement Risk You’re Probably Overlooking: Longevity

Why Outliving Your Savings Is the Biggest Threat—and How to Plan for It

When most people think about retirement planning, their first concerns usually revolve around market volatility, inflation, or healthcare costs. But there’s one critical risk that’s often overlooked—yet it quietly threatens the security of even the most carefully planned retirements: longevity.

Living a long life is a blessing. But ironically, it can also become one of the greatest financial burdens you’ll ever face.

At Protection Plus Insurance, we help individuals and families in San Diego, across California, and across the country, prepare for the full arc of their retirement—whether that’s 20, 30, or even 40 years of financial independence. In this article, we’ll explore why longevity is the “silent risk” in retirement planning, and how solutions like personal pensions can provide guaranteed lifetime income to protect against it.

What Is Longevity Risk?

Longevity risk is the possibility that you’ll live longer than your savings last. It’s not just a hypothetical concern—according to the Social Security Administration:

• A 65-year-old man today has a 1 in 3 chance of living past age 90.
• A 65-year-old woman has nearly a 1 in 2 chance of living past age 90.
• A married couple has a 50% chance that at least one partner will live past 95.

That’s potentially 30+ years of retirement income you’ll need to generate, without a paycheck.

And while longer lives are a sign of medical progress and healthier lifestyles, they can also dramatically increase your risk of running out of money—especially if your retirement plan doesn’t include reliable income sources beyond Social Security.

The Hidden Impact of Longevity

The challenge with longevity risk is that it magnifies all other retirement risks. The longer you live, the more likely you are to:

• Experience market downturns that erode your investments.
• Face rising healthcare costs as you age.
• Struggle with inflation, which quietly eats away at purchasing power.
• See Social Security benefits cover a shrinking portion of your expenses.

In other words, longevity amplifies everything else. A retirement plan that looks adequate at 65 may fall dangerously short by 85 or 95—just when you need the most support.

Why Traditional Portfolios Fall Short

Many retirement portfolios are built around the “4% rule,” which suggests withdrawing 4% of your savings per year to make your money last. But recent research has cast doubt on this rule’s reliability, especially in today’s low-interest, high-volatility environment.

Consider these additional pressures:

• Sequence of returns risk means a market crash early in retirement can permanently shrink your nest egg.
• Rising life expectancies mean you might need income for 35+ years, not 25.
• Fixed income yields remain historically low, making it harder to generate stable income.

Simply put, relying entirely on market-based investments to fund a 30-year retirement introduces significant uncertainty when performing your retirement income planning.

Personal Pensions: A Powerful Tool Against Longevity Risk

So how can you ensure your money lasts as long as you do?

One of the most powerful financial solutions is a personal pension, also known as an annuity-based income strategy. Unlike traditional pensions, which are increasingly rare in the workplace, personal pensions are private contracts you establish with a financial provider—often through a trusted advisor like Protection Plus.

Key Benefits of Personal Pensions:

✅ Guaranteed Lifetime Income – Many personal pensions provide income that continues for the rest of your life, no matter how long you live. This eliminates the fear of running out of money in your 80s, 90s, or beyond.

✅ Spousal Protection – Options are available to continue income for your spouse if you pass away first.

✅ Market Downside Protection – Many products shield your principal from market losses, adding a layer of security during volatile periods.

✅ Customizable Payouts – You can structure your income to begin now or later, increasing the payout amount if you delay.

✅ Tax Deferral – Earnings inside personal pensions can grow tax-deferred, optimizing long-term compounding.

Case Study: How a Personal Pension Helped One Couple Secure Their Future

John and Lisa, both age 62, had saved diligently and accumulated around $750,000 in retirement accounts. They planned to retire at 65 but were concerned about the market, inflation, and how long their savings would realistically last.

After a complimentary retirement income analysis with Protection Plus, we showed them how allocating just part of their portfolio into a personal pension could create a guaranteed monthly income stream for life—complementing their Social Security and covering basic living expenses regardless of market performance.

Now, they sleep easier knowing that their essential retirement needs are covered no matter how long they live or what the stock market does.

How Protection Plus Helps You Plan for Longevity

At Protection Plus Insurance, our process starts with education and clarity. Our Retirement Income Analysis is designed to:

• Assess your risk of outliving your savings.
• Evaluate how different income streams work together (Social Security, savings, pensions, annuities).
• Explore the pros and cons of personal pension strategies tailored to your needs.
• Deliver a customized plan to generate predictable, lifelong income.

We don’t believe in cookie-cutter solutions. Our advisors take the time to understand your goals, assets, and life expectancy so we can recommend options that fit your retirement vision.

And the best part? Our Retirement Income Analysis is completely free and comes with no obligation.

Don’t Let Time Become Your Greatest Risk

Longevity risk isn’t about fear—it’s about foresight.

If you live a long, fulfilling life (and we hope you do), your retirement income plan needs to keep up. Ignoring the possibility of living into your 90s could result in difficult financial decisions down the road—decisions that can affect your lifestyle, independence, and peace of mind.

Instead, take a proactive step toward building a retirement income that you can’t outlive.

Request a Complimentary Retirement Income Report Today

Let’s turn your nest egg into a secure retirement income plan—one designed to protect you for as long as you live. Request Your Free Retirement Income Report or call us directly at 852-352-6535 to schedule your consultation.

Sources:

• Social Security Administration Life Expectancy Calculator
• Alliance for Lifetime Income
• Morningstar Research: The State of Retirement Income