How to gauge clients’ retirement planning horizons

Retirement planning horizons should be grounded in longevity risk, not just average life expectancy. For many clients, it is prudent to plan for a longer retirement than they expect, since underestimating lifespan can lead to income shortfalls when flexibility is lowest.

A longer horizon may require more conservative spending and investment choices, but it can also help preserve lifestyle and reduce the chance of running out of money. A shorter horizon can support higher early spending, yet it raises the risk of future strain if health or market conditions change.

Advisors should compare client expectations with realistic life-expectancy ranges and revisit those assumptions over time. Protected lifetime income sources such as Social Security, pensions, and annuities can strengthen plans by reducing dependence on portfolio withdrawals.