New Life Expectancy Data Reveals Surprising Impact on Retirement Plans

Core Insights - Life expectancy has increased, with average life spans reaching 75.8 years for males, 81.1 years for females, and 78.4 years overall in 2023, driven by medical advancements [1] - Retirement planning must adapt to longer life spans, as many retirees now face 25 to 35 years of retirement, necessitating a shift from traditional planning models [3][4] Retirement Planning Implications - The traditional retirement model of working for 40 years and expecting 15 to 20 years of retirement is outdated, as retirees now require funds to last significantly longer [3][4] - Inflation has become a critical factor, with the highest year-over-year rates in 2022 and 2023 in about 40 years, impacting purchasing power during retirement [4] Financial Risks in Retirement - The primary risk for retirees is running out of money, known as longevity risk, which is exacerbated by longer life expectancies [6] - Increased demand for long-term care is anticipated, with nursing home residents potentially rising by 75% over the next decade, adding financial strain [7] - Market risks, particularly sequence-of-returns risk, can severely impact retirement portfolios, especially if market downturns occur early in retirement [8]