This Free Calculator Could be the Secret to Retirement Planning Success

How much you manage to save for retirement, and how you choose to invest your retirement savings play big roles in determining how comfortable your retirement will be. But once you are retired, the big challenge is making sure you don’t run out of money.

To avoid that risk you want to be extra careful that your plan isn’t based on underestimating how long you may live.

You know that I have long recommended that you base your retirement planning on living to at least 90; to be even safer planning to age 95 is even smarter. And yet I know many of you are thinking I am nuts to suggest you would live that long. Or that the odds are so slim, you aren’t going to worry about it.

You are potentially making a very costly mistake. Anyone who makes it to age 65 basically has a 50-50 chance of still being alive in his or her mid 80s. And living into your 90s is not nearly as rare as you may think.

For instance, a 65-year old single woman in average health today (and a non-smoker) has a 46 percent probability of being alive at age 90, and a 25 percent probability of living to 95. If she is in excellent health, she has better than a 50 percent probability of being alive at 90 and a 1 in 3 probability of living to 95.

If she is married, and her husband is 67 today, there is a 60 percent probability one spouse will be alive at age 90—and that’s only assuming they are both in average health.

All of those examples come from a free online tool, the Actuaries Longevity Illustrator, built by the Society of Actuaries. Once you answer a few questions you will be shown your results, displayed as charts. You can click on the Show Data Table link for each chart, to get the specific probabilities that you may live to a given age.

None of us knows for sure how long we will live. But blind guesses can often lead to underestimating. The Longevity Illustrator uses reams of data to arrive at its estimates. That’s a far better tool for figuring out one of the most important variables in building a successful retirement plan.