Longevity Risk Funding Calculator
Plan for outliving your money by funding to a conservative age, and see how many extra years and dollars that safety margin costs.
How it works
Capital = spend × [1 − (1 + g)^(−years)] ÷ g · Safety margin = capital to plan age − capital to life expectancy
Life expectancy is an average, but you experience your own single lifetime — and half of people outlive the average. Longevity risk is the chance of running out of money because you lived longer than planned, so prudent planning funds to a conservative age like 95 rather than the mean. This tool prices both the average-case and the plan-to-age portfolios in real terms and shows the extra capital that longevity insurance-by-savings requires.
Worked example
A 65-year-old spending $40,000 a year with a 2% real return needs about $895,000 to reach 95, versus roughly $703,000 to reach the average life expectancy of 85 — a $192,000 safety margin to fund 10 extra years.
Frequently asked questions
What age should I plan to?
Age 90-95 is common, and 100 for those with family longevity or a spouse. A married couple should plan to the longer of the two life expectancies, since the money must last until the second death.
Is there an alternative to saving for the tail risk?
Yes — a deferred income annuity (longevity annuity) pays for life starting at, say, 80 or 85, letting you fund the rest of the plan to a shorter horizon and pool the longevity risk.
Why plan past average life expectancy?
Because roughly half of people live longer than the average, and running out of money at 90 is far worse than dying with a modest surplus. The extra margin buys peace of mind.
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Educational estimate using simplified assumptions — real returns, taxes and fees vary. Not financial advice.