When planning for retirement, most people Google “life expectancy” and see a number, maybe it is 83 and then use that as their planning horizon. But is that enough? Should your retirement strategy be built around a number that is just… an average?
Let us break down one of retirement’s biggest misconceptions and if you can, how to plan smarter for the years ahead.
The problem with “life expectancy”
Is people assume it’s a prediction of how long they will live. But in reality, it’s a statistical average. That means half of us will likely live longer than that number, sometimes decades longer.
To illustrate this, there is data from the Australian Bureau of Statistics that shows Australians who died in 2023 did so across a wide range of ages. While the average might have been around 83, thousands of Australians lived well into their 90s or even hit 100+.
So, if you plan your retirement finances to last only until the average life expectancy, you are possibly at risk of running out of money, especially if you’re one of the many who live longer.
Planning for longevity means planning for uncertainty.
One key takeaway is retirement planning is not about picking the “most likely” number it’s about preparing for the possible extremes.
For example:
- If you want to be 50% confident your money will last, plan for age 94.
- For 75% confidence? Plan to 98.
- To be 95% confident? Plan to 100.
For couples, the picture gets more complex. Because either partner can live a long time, you effectively get two chances of beating the average, meaning retirement planning should factor in the longer-living spouse.
A more realistic approach to retirement timelines
Rather than using life expectancy alone, factor in:
- Your current age (already being 65 means you have outlived many in your birth cohort)
- Health and lifestyle (active, healthy individuals tend to live longer)
- Medical improvements (future advancements are likely to extend lifespans even further)
- Wealth (which often correlates with access to better healthcare and lifestyle)
Add these elements together, and it is easy to see why many Australians should be planning for their money to last closer to 100, not 83.
So, what is the trade-off?
Planning for a longer life means spending less each year or finding smarter ways to structure your retirement income. For example, a 65-year-old woman with $400,000 in super:
- If she wants to be 50% confident her money lasts, she might draw $23,000 a year.
- For 75% confidence, she’d need to reduce that to about $20,000.
- For 90% confidence, it drops to around $19,400.
This highlights the delicate balance between lifestyle and longevity, spending enough to enjoy retirement, but not so much that you run out.
Try not to plan based on averages, aim to plan with more confidence.
Retirement is changing. People are living longer, healthier lives but many are still planning with possibly outdated assumptions. If you’re a couple, healthy and have access to good care and support, your retirement plan might need to span 35+ years, not just 20.
Don’t just rely on Google, even if it’s Google AI. If you’re thinking about your own retirement horizon, we are here to help. Our Brisbane and Launceston team specialises in retirement planning strategies that balance confidence, lifestyle and longevity.
You can’t control how long you’ll live, but with the right plan, you can control how prepared you are.
