The toughest part about planning for your retirement is estimating how long it will last. Every other calculation on how much you need and how much you'll need to save to get there can change dramatically based on your estimate of how long you need your money to last.

That's what makes this the most important retirement chart you'll ever see: 

Life expecancy chart showing declining life expectancy by age, with women generally outliving men at each age point.

Data source: Social Security Administration. Chart by author.


It's based on the Social Security Life Expectancy table, and it estimates how many more years the typical man or woman has to live, based on his or her current age.

Your retirement duration may vary, but it's a good starting point

Of course, your own retirement may last longer or shorter than the overall averages indicate, but this chart gives you a superb starting point for estimating how long you should plan around. If you want to be conservative or if family history and your health point to longevity, add some time to the chart when planning for your own retirement. But also know that it means that a 40-year retirement may be feasible if you're finishing work as a 60-year-old, but not very likely if you work until you're 80.

This matters, because the longer you expect your retirement to last, the more you'll need saved up to get there for any given lifestyle. Want your portfolio to provide $100,000 a year, but think your retirement will last only three years? If so, $320,000  might be enough to get you there and cover anticipated inflation along the way. Want the same lifestyle but expect a 30-year retirement? You'll need closer to $2,500,000  for your portfolio to provide you that much inflation-adjusted income for that long.

The triple benefit from working longer

That chart also hints at the huge benefit to the quality of your retirement lifestyle that you can get just by working longer. There are three drivers here that can help your financial picture:

Senior Man and Woman, with Social Security Care with a picture of George Washington superimposed on it

Image source: Getty Images.

  • First, with each year that passes, your expected retirement gets shorter, so you need to save less to support a given lifestyle.
  • Second, the longer you wait to claim Social Security between age 62 and 70, the higher your benefit will be. A higher Social Security benefit means your savings will have to cover that much less of your lifestyle.
  • Third, the later in life you retire, the more years your investments can compound on your behalf before you need to convert your portfolio to retirement-readiness mode. That can potentially help your nest egg get bigger, which would also help improve your retirement lifestyle.

When it comes to retirement planning, the trade-off between time and money is incredibly clear. Your objective is to retire with enough money to enjoy the time you have available to you, while still having enough of that time to enjoy the rewards of your lifetime of work. Combining that all-important chart with your understanding of your current financial state can help you find the right balance point for you along that trade-off between time and money.

Invest for the time you have left

Pile of gold coins opposite a clock on a balance beam

Image source: Getty Images.

The other thing to note from that chart is that you might have decades ahead of you once you retire, especially if you retire young. With a long-term time frame, you will probably need to own stocks if you want a decent chance for your money to last at least as long as your retirement does. Not every dollar of your investments should be in stocks once you've left the working world. Still, once you've covered your near-term needs with bonds and cash, your longer-term money may grow better in stocks.

That way, you keep the higher certainty you need to assure you can cover your costs today, while still enabling part of your money to have a chance to grow to combat inflation over time. When you have reason to believe your retirement can last decades, it gives you your best shot at success.

One chart, one future -- yours

The most important question you need to address when it comes to planning your retirement is how long you expect that retirement to last. While you won't know that with certainty in advance, that chart based on Social Security's longevity table can give you a great starting point for your plans. Leverage it, and you'll find that the rest of your plans become much easier to consider.