Preparing clients for extended retirement with longevity analysis

October 31, 2016 by Matt Marcum

An older couple on vacation because they planning for a possible extended retirement with longevity analysis

about the author:

Matt Marcum

Sales enablement lead

Matt is a 2009 graduate of the University of Michigan and has worked in multiple roles at Advicent. He loves talking about financial planning and the value it brings both to advisors and to their clients. When not discussing FinTech trends with advisors, he enjoys spending his time outdoors with his wife and their dog.

A recent article from The Street discussed that the human lifespan may extend to 115 years. While human life expectancy possibly increasing is not surprising, the financial repercussions on one's retirement surely is. After all, living to age 115 would mean that you would be living in retirement for 50 years if you retired at the age of 65.

The importance of “what if” planning and longevity analysis

This got me thinking about the traditional financial plan and the importance of "what if" planning for clients. Many times clients ask questions about different college scenarios for their kids, if they can afford more vacations during retirement, or to see the effects of buying a new car every five years in their financial plan. However, an underrated and much more likely scenario is that people will end up outliving their financial plan’s life expectancy.


In our NaviPlan® financial planning software, Advicent refers to this as longevity analysis. Longevity analysis allows advisors to take the current assumptions of a financial plan and then extend the life expectancy to see if there are any weaknesses in the plan. Longevity analysis can have enormous effects on a financial plan, especially if a client is barely meeting their base retirement goals.


Additionally, longevity analysis could lead to more meaningful conversations around fixed income options for clients. The article from The Street points out that single premium immediate annuities (SPIAs) would be one of the products that could help clients who suspect that they will outlive their financial plans.

Making recommendations under the DOL Conflict of Interest Rule

Having the ability to model various scenarios for clients, including the possibility of living longer than originally expected, could become key in making recommendations under new regulation from the impending DOL Conflict of Interest Rule.


Click here to learn more about how Advicent tools can be leveraged in your DOL compliance strategy.

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