Most couples have a dream for their retirement. Ticking things off their bucket list, sailing into the sunset, or jumping on the grey nomad caravan trail around Australia.
Whatever your plans, it’s a good idea to consider your finances to make sure you can live out your days, just as you dreamed. For couples, this means having a solid understanding of how long your joint retirement plan might last.
This sounds straightforward – but is not as simple as it sounds. In most cases, a financial adviser will be able to help you understand your individual lifespan projection, based on average life expectancy for someone your age. But here’s where most couples go wrong. Looking at averages is helpful, but there is still significant uncertainty about how long any individual will live. Working out how long your retirement funds need to last is not as simple as just choosing the longer life expectancy of the two of you!
Couples need to consider that their retirement plan will need to continue as long as either partner stays alive.
From a probability point of view, this means couples get two chances of living into old age. Even if one partner dies at their life expectancy, there is still a 50% chance that the other partner will live beyond their life expectancy.
A couple’s retirement plan needs to extend a few years beyond the length of the two life expectancies to give the same level of confidence as for each person individually.
A closer look
Taking into account uncertainty, even a few years added to individual average life expectancies won’t provide sufficient confidence for most people.
In the graph below the number of deaths at each age for 1,000 65-year-olds is shown. There is a curve for males (green), females (red) and the longer living spouse of couples (purple). Singled out on each curve is the corresponding age you should plan to for a 75% confidence that your plan will cover as long as you live. This is the age that is high enough to cover 75% of people’s lifespans.
As you can see, the age for a couple is the longest in order to be sure the retirement plan will continue for as long as either person lives. 
Real life examples
John is a 65-year-old male. He sets a planning horizon of 29 years from retirement to be 75% confident that his retirement plan will cover him financially for his whole life.
However, if John had a partner who was exact the same age and gender as him, their joint retirement plan would need to be extended to 32 years to have the same level of confidence it can last until both of them have passed away.
Here are some further examples, all based on people of average health:
There is a wide range of different lifespans any group of people will experience. For example, the average life expectancy for a 65-year-old Australian woman of average health in 2020 was 89 years. However, 54% of these women are expected to live to age 90 and beyond, with 17% expected to live past age 97!
It should be noted that while individual life expectancies vary based on several predictive factors, including lifestyle and health, there is always an element of randomness.
Going the distance
Retirement is a dramatic life change for couples and having enough savings for a long and happy retirement is a key ingredient to many happy and successful years together. It is crucial that couples prepare themselves financially and psychologically for what could turn out to be a long chapter in their lives!
How long will you live?
We cannot predict exactly how long you will live, but we can help you to estimate your personal life expectancy and set a confident retirement planning horizon using our Lifespan Calculator.
 This chart, along with all the calculations in this article, is based on the Australian Life Tables 2015-17 with 25-year improvement factors.