The Longevity Planning Crisis: Why Your Retirement Needs to Last 10 Years Longer

The 30-Year Retirement Is Here

When Social Security was created in 1935, the average American male lived to 58. The retirement age was set at 65 — most people weren't expected to collect benefits at all.

Today, a healthy 65-year-old couple has a 50% chance that at least one spouse will live past 90. A 25% chance one will reach 95. If you retire at 62, that's potentially 33 years of retirement income to fund.

Most financial plans aren't built for this reality.

Why Traditional Planning Falls Short

The standard retirement planning model assumes a 20-25 year retirement horizon. That assumption drives every calculation — withdrawal rates, asset allocation, tax projections, Social Security timing, and Medicare planning.

Here's what breaks when retirement lasts 30+ years:

The 4% Rule Doesn't Hold

The famous "4% rule" — withdraw 4% of your portfolio in year one, then adjust for inflation — was designed for a 30-year retirement. Extend that to 35 or 40 years and the failure rate climbs significantly. A portfolio that has a 5% chance of running out over 30 years might have a 20-30% chance of running out over 40 years.

Tax Brackets Compound Over Decades

Here's the piece most people miss: a longer retirement means more years of Required Minimum Distributions (RMDs), more years of Social Security taxation, and more years exposed to potential tax rate increases.

With the OBBBA making the TCJA's lower individual tax rates permanent, today's brackets are the new baseline. But "permanent" in tax law means "until Congress changes it." Over a 30-year retirement, the odds of at least one significant tax increase are high.

Converting to Roth now — while rates are at historically low levels — hedges against decades of tax uncertainty.

Inflation Erodes Everything

At 3% average inflation, $100,000 in annual expenses becomes $243,000 over 30 years. Your tax-deferred accounts grow too, but so do your RMDs — pushing you into higher brackets in exactly the years when you can least afford it.

Our Longevity Risk Calculator models these compounding effects over different time horizons.

The Longevity-Roth Connection

Strategic Roth conversions are one of the most powerful tools for managing longevity risk. Here's why:

1. Tax-Free Growth for Decades

Every dollar in a Roth IRA grows tax-free — and the longer it grows, the more valuable that tax-free status becomes. A $100,000 Roth conversion at age 62 that grows at 7% annually becomes $386,000 by age 82 and $761,000 by age 92. Every penny of that growth is tax-free.

In a traditional IRA, that same growth creates a progressively larger tax liability through RMDs.

2. No RMDs for the Original Owner

Traditional IRAs and 401(k)s force you to take Required Minimum Distributions starting at age 73. Roth IRAs have no RMDs during the owner's lifetime. This means:

• You control when and how much you withdraw
• Your money can continue growing tax-free as long as you want
• You're not forced into higher tax brackets by mandatory distributions
• Your Medicare premiums aren't inflated by income you didn't need

For a 30+ year retirement, eliminating RMDs can save hundreds of thousands in taxes.

3. A Tax-Free Buffer in Down Markets

One of the biggest risks in a long retirement is sequence of returns risk — the danger of large market losses early in retirement when you're withdrawing from the portfolio. If the market drops 30% in year three of retirement and you're pulling from taxable accounts, you're selling low AND paying taxes on the withdrawals.

A Roth IRA provides a tax-free withdrawal source during down markets. You can pull from the Roth while letting your taxable accounts recover, avoiding the double penalty of selling low and paying taxes.

4. Estate Planning Leverage

Under the SECURE Act's 10-year rule (unchanged by the OBBBA), most non-spouse beneficiaries must fully distribute inherited IRAs within 10 years. For a traditional IRA, that means your heirs face a compressed tax bill — often during their highest earning years.

Inherited Roth IRAs are still subject to the 10-year distribution requirement, but the distributions are tax-free. Over a 30-year retirement, converting traditional assets to Roth systematically can eliminate your heirs' inherited tax burden entirely.

The Numbers: Longevity Changes Everything

Consider two retirees, both age 65, both with $1.5 million in traditional IRAs.

Retiree A: Lives to 82 (17-year retirement)

• Takes RMDs starting at 73
• 9 years of RMDs, gradually increasing
• Total RMDs: ~$850,000
• Total federal taxes on RMDs: ~$170,000
• Remaining balance to heirs: ~$900,000 (taxable)

Retiree B: Lives to 95 (30-year retirement)

• Takes RMDs starting at 73
• 22 years of RMDs, with larger percentages each year
• Total RMDs: ~$2.1 million
• Total federal taxes on RMDs: ~$460,000
• The account may be significantly depleted
• IRMAA surcharges: potentially $50,000+ over the period

For Retiree B, a strategic 8-year Roth conversion window (ages 65-73) could reduce lifetime taxes by $150,000-$250,000 — and that gap widens with every additional year of life.

Use the Longevity Risk Calculator to model your specific timeline.

Five Signs You Have Longevity Risk

1. Family history of longevity — If your parents or grandparents lived into their 90s, plan accordingly
2. Good health at 60+ — Healthy 65-year-olds have substantially higher life expectancies than the average
3. Large traditional IRA/401(k) balances — The bigger the balance, the bigger the RMD problem gets over time
4. Spouse with significant age gap — A younger spouse may need income for decades after the older spouse passes
5. Conservative withdrawal rate — If you're only withdrawing 3-4% in early retirement, the portfolio will keep growing, making future RMDs even larger

Planning for 30+ Years

Rethink Your Conversion Window

Most Roth conversion strategies assume a 10-year window between retirement and RMDs. But if you expect a 30+ year retirement, the optimal conversion amount per year may be different. You might benefit from converting more aggressively in the early years, even if it means paying slightly higher taxes now, because the decades of tax-free growth are worth more.

The new senior standard deduction ($4,000 per person ages 65+, available 2025-2028 under the OBBBA) creates additional room in lower brackets for those first conversion years. But it phases out between $150,000 and $250,000 MAGI for married filers — conversion income counts.

Coordinate with Social Security Timing

Delaying Social Security to age 70 increases your benefit by roughly 8% per year from 62 to 70. For a long retirement, maximizing that guaranteed income stream is powerful. The years between retirement and age 70 — when you have no Social Security income — are the optimal Roth conversion window.

Use the Calculators

• Longevity Risk Calculator — Model different life expectancy scenarios and see how they change your retirement math
• Quick RMD Calculator — See how your RMDs grow over time and their tax impact
• Advanced Roth Planner — Build a multi-year conversion plan optimized for your timeline

The Bottom Line

Longevity is a gift — but it requires financial planning that matches reality. A retirement that lasts 30 years or more fundamentally changes the math on taxes, withdrawals, Medicare, and estate planning.

Strategic Roth conversions are one of the most effective tools for managing this risk. The earlier you start planning, the more options you have.

If you're within 10 years of retirement and your traditional retirement accounts exceed $500,000, schedule a consultation to explore how a longevity-aware conversion strategy could work for your situation.