The average life expectancy at birth in the United States is currently a bit under 79 years, and has actually dropped a bit over the last two years according to the National Center for Health Statistics.
Fortunately, the average 65-year-old retiree can expect to live longer than life expectancy at birth, at nearly 85 years on average.
This is because the death curve is lopsided. Once you’ve hit 65, you’ve gotten past some of the ailments that affect infants, you didn’t have a birth defect that cut your life short, you didn’t become one of those reckless driver fatality statistics that disproportionally kill 20-somethings, you haven’t died in a war, and you’re at a lower risk for various other types of death associated with lifestyle. You’ve beaten several death risks and have made solid choices, especially if you’re also retiring from a long, rewarding federal career.
In fact, there’s a good probability that you or your spouse will reach 90 or 95.
Specifically, there’s a 49% chance that you or your spouse will reach 90:
And there’s an 18% chance that at least one member of a 65-year-old couple will reach 95:
And those are for average people, with a wide range of health practices. Many variables are within your control.
Most of the top 10 common causes of death are partially preventable: cardiovascular disease (#1), cancer (#2), stroke (#5), Alzheimer’s (#6), diabetes (#7), kidney disease (#9), and suicide (#10). By staying active, eating healthy whole foods, reducing or eliminating processed foods and added sugar, avoiding smoking and excess drinking, and keeping your mind working, you can greatly increase your chances of hitting 90, 95, or even 100.
But that means your money must last a long time too; potentially 30 or more years after retirement.
If you retire with $250,000 in your TSP, it keeps earning an average of 6% per year in retirement from stocks and bonds, and you withdraw an inflation-adjusted $15,000 per year for living expenses on top of your pension, the money would last about 28 years:
However, if you only earn 4-5% returns per year on average (which is not unrealistic for a conservative retiree portfolio), or if the stock market has a big decline during the early years of your retirement when your portfolio is at its biggest, you could run out of money after just 20 or 25 years or less.
For this reason, it’s important to plan for the best and worst- that you or your spouse will live well into your 90’s, that market returns won’t be great during that period, and that your retirement expenses might be higher than expected.
For more detail on how much money you might need and how to get there, I recommend reading this article: TSP Contributions: Are You On Track for Retirement?