Will I Outlive My Net Worth?
Many affluent Canadians assume that having a substantial net worth means their financial security is assured. Yet one of the most important retirement planning questions is not how much you have, but how long your wealth must last, and whether it can truly support you through decades of retirement.
This concern goes beyond investment returns. It is rooted in longevity risk; the possibility of living longer than your financial resources can support.
What Is Longevity Risk and Why It Matters
Longevity risk is the chance that you will outlive your savings, pension income, or other financial resources. It has become more relevant as life expectancies have risen dramatically over the past few decades. Canadians today enjoy significantly longer lives than earlier generations. A person retiring at age 65 may reasonably expect to live well into their 80s, and many live into their 90s or beyond.
For example, life expectancy in Canada has increased to roughly 81 years, up significantly over the past half-century. If you retire at 65 today, that could mean planning for 20 years or more in retirement, far longer than the roughly seven years people once anticipated.
For many affluent Canadians, a retirement that could last 25 – 30 years or longer presents a serious planning challenge: Can your current net worth fund your lifestyle, health needs, and long-term care costs throughout those years?
Longevity Is Good News — With Financial Implications
Living longer is a testament to better healthcare, improved living standards, and active lifestyles. But it also means:
More years of living expenses
Higher exposure to inflation and market risk over time
Increased health and long-term care costs
Potential depletion of retirement savings earlier than expected
That dual reality: long life and rising costs is exactly what longevity risk describes.
A 2024 survey by Canada Pension Plan Investments found that 61% of Canadians worry they will run out of money in retirement, reflecting how real this risk feels even to savers.
Why Wealth Alone Isn’t Enough
We often think that a large net worth provides peace of mind. But consider this:
Wealth can be illiquid. Much of it may be tied up in real estate, private businesses, or market investments that may not produce steady income in retirement. These assets could require selling or restructuring to cover everyday needs or unexpected costs.
And longevity risk compounds other financial pressures like:
Inflation eroding purchasing power over decades
Healthcare costs not fully covered by public programs
Long-term care or assisted living expenses where costs can be significant and unpredictable
Market volatility impacting portfolios drawn down over time
Even strategies that seem conservative or risk-aware, such as assuming moderate withdrawal rates, can fall short if life expectancy or future costs exceed expectations.
The Hidden Costs of Retirement Wealth
Rising Health and Long-Term Care Costs
Healthcare spending rises sharply with age, and not all costs are covered by public health systems. Private services, long-term care, or extended home care add substantial expenses that must be planned for alongside regular retirement spending.
The Inflation Factor
Retirement can span decades, and what seems like a comfortable withdrawal plan at age 65 may not keep pace with inflation by age 80 or 90. Even modest annual inflation can significantly erode purchasing power over a long retirement horizon.
Sequence of Returns Risk
Early retirement years spent in a market downturn can have outsized effects on long-term portfolio sustainability. Underestimating this risk may lead to withdrawing more during market lows, hastening asset depletion.
The Real Question Is “Will My Wealth Last as Long as I do?”
For affluent Canadians, that means evaluating your plan not solely by total net worth but by:
Reliable income streams throughout long retirements
Guaranteed sources of lifetime income (such as annuities or pension structures)
Realistic assumptions about lifespan, inflation, and healthcare costs
Stress tests that include longer than average life expectancies
Planning for longevity risk requires rethinking wealth through the lens of duration and certainty, not just accumulation.
Strategies to Address Longevity Risk
While every plan must be individualized, successful strategies often include:
Lifetime income planning — ensuring you have income sources that you cannot outlive
Stress-testing retirement spending for longer scenarios
Allocating for health and long-term care contingencies
Dynamic withdrawal strategies that adjust for market conditions over time
A thoughtful longevity risk plan is less about maximizing returns and more about delivering predictable income and resilience throughout uncertain decades of retirement.
Final Thought
The real risk in retirement is not simply running out of money.
It is outliving your ability to maintain the lifestyle and financial independence you worked so hard to build.
For high-net-worth Canadians, longevity risk is not academic. It is a central planning concern that demands sophisticated analysis and active management.
If you find yourself wondering whether your wealth will last, start by having a conversation with your advisor about longevity risk and retirement income strategy. A tailored plan will help ensure your financial security matches your lifespan and lifestyle expectations.
Disclaimer: This article is for informational purposes only and does not constitute tax, financial, legal, or investment advice. The applicability of any strategy depends on individual circumstances, current laws, and market conditions. Always consult with qualified professionals before making financial decisions.
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