Why does everyone have to die at 90?

Age 90 should be the planning floor for income drawdown levels, not the ceiling, Ralph Stewart, Founder and Managing Director of Lifetime Retirement Income, argues. In the first of a three-part series on the need for professional investment management support in retirement planning, he warns that outdated assumptions about longevity are putting retirees at risk.

As mortality continues to improve, today’s retirees are likely to live longer than the life expectancy figures in simple tables, Ralph Stewart says.

“That means designing an income so capital runs out at 90—and then leaving that plan unreviewed—exposes New Zealanders to the real and growing risk of outliving their savings in very old age.” he says.

Yet targeting age 90 as a ‘safe’ endpoint remains common. For example, KiwiSaver regulations require providers to include projections in annual statements to show how a member's savings could translate into a weekly income from age 65 to 90.

This government‑directed assumption leaves KiwiSaver members exposed from age 90 onward. And in a world where medical advances, improved pharmaceuticals, and better access to healthcare are steadily extending lifespans, treating 90 as a hard upper limit isn’t just outdated—it can be risky.

The true retirement income horizon is extending, and financial planning must adapt.

We’re living longer—fact.

Today’s 65-year-olds are already benefiting from greater medical and lifestyle advances than previous generations, and they will continue to benefit as breakthroughs emerge. Mortality is not fixed or frozen in time; it changes within a single lifetime.

Research into healthy ageing is accelerating, and the next five years are likely to see growth in programmes aimed at extending ‘healthspan’ (years lived in good health). While access and outcomes will vary, this is likely to have cost implications for retirement too, as people are more active for longer.

The numbers

Statistics make the trend clear:

• New Zealand cohort analysis shows a woman born in 1952, (now aged 73), has an average lifespan of around 89, with the most common age at death about 92.¹
• About one in five of the females in this cohort can expect to reach at least 95; for men, about one in five are expected to reach at least 93.¹
• There is even a 3–6% chance of living to 100, depending on sex.¹
  
  

However, these figures capture only a moment in time (the figures are based on a 2019 report, focused on a cohort that turned 65 in 2017). They don’t account for future improvements.

“This means that the ‘average life expectancy at 65’ quoted by many sources is more likely to be a floor, not a ceiling, for today’s 65-year-olds,” Stewart says.

Lifetime Retirement Income's Calculator incorporates up-to-date mortality improvement assumptions, recognising that today an 85-year-old woman can expect to live longer than was projected when she was 65. Advisers can choose from three longevity settings, enabling clients to factor in personal considerations - such as family history, health status and lifestyle - when determining an appropriate time horizon for their retirement income. 

Why a fixed drawdown plan is so dangerous

Retirement plans that begin income withdrawals at age 65 and aim to exhaust savings by age 90 are effectively betting that clients will not live beyond that point. It’s a set-and-forget approach that could expose retirees to severe hardship late in life.

“If you live longer than age 90, your portfolio may be exhausted when you are in your late 80s or 90s, right when it is hardest to cut spending, earn extra income, or change strategy. That’s a dangerous position to leave clients in,” Stewart says.

“The risk is asymmetric: if you die a little earlier than planned, you leave some money behind; if you live longer than planned, you risk running out of money while still alive, right when you will struggle to make up the deficit and possibly have the highest care needs.”

A better way

To serve clients well, advisers should treat age 90 as a planning floor rather than an endpoint. That means:

• Reviewing a client’s plan on the anniversary of their birthday, using updated cohort life expectancy and survival probabilities, not just the old rule of thumb figures.
• Stress testing your investment and tax forecasts to understand the impact on funds of living longer than expected.
  
  
  

The easy solution

The Lifetime Retirement Income Fund conducts yearly plan reviews, performs stress tests, and supplies advisers with regular income assessments for annual client reviews. 

This is core work for Lifetime - support that can significantly enhance outcomes for both advisers and their clients. Try our Adviser Income Calculator today (Click to Try) or talk to Chelsea Devlin about a distribution agreement for Lifetime Retirement Income. 

¹Retirement Income Interest Group of the New Zealand Society of Actuaries. (2019). Submission to the 2019 Review of Retirement Income Policies.