The New Longevity Challenge

How advisors can structure portfolios to sustain income, growth and flexibility over longer retirements

by Brandon Wellman, CFP, RICP 

As life expectancy continues to increase, retirement planning has evolved. Today, the challenge is no longer just about helping clients reach retirement, but structuring portfolios that can sustain income, growth and flexibility over 25-30 years, or more. Even small inefficiencies or misalignments over that kind of extended time horizon can compound and have a meaningful impact on long-term outcomes.

This requires balancing guaranteed income, growth-oriented assets and tax-aware distribution strategies in a way that reflects each client’s unique needs, preferences and risk tolerance.

Even with this approach, consistent gaps emerge when planning for a longer retirement. In my experience, three stand out: imbalanced spending behavior, insufficient allocation to growth and limited tax diversification. These areas can compound over time and impact long-term sustainability if they are not addressed early and revisited consistently.

Balancing Spending

One of the most common and persistent challenges in long-term retirement is managing spending behavior in a consistent and sustainable way. Many clients will want to do everything they can in early retirement to enjoy it but lack the foresight that they will need to save some for a long retirement. We often see them wanting to either overspend or underspend in early retirement years.

For example, some clients will enter retirement with a long list of travel plans, large purchases or lifestyle upgrades. They’ll start drawing more heavily from their savings in the first few years without fully considering how that pace of spending may impact the long-term sustainability and flexibility of their plan over time.

Meanwhile, others don’t want to spend anything in early retirement because they are too afraid to deplete their assets. In these cases, clients often become overly cautious, second-guessing spending decisions and avoiding larger or long-term commitments because they lack confidence in how their plan will hold up over time and across different markets.

When clients haven’t properly planned, uncertainty can lead to overly conservative spending or a more limited retirement than necessary. These behaviors are not necessarily driven by a lack of discipline, but rather by a lack of clarity and confidence around what level of spending is truly sustainable.

It’s important to strike a balance between making sure clients don’t outlast their money, ensuring portfolios are allocated and withdrawals are structured appropriately based on market conditions. At the same time, clients need to feel comfortable spending their assets in a way that supports the lifestyle they envisioned going into retirement.

To guide this, advisors should build a framework that defines sustainable spending. This involves evaluating the client’s income, existing assets, goals and expected life events, then aligning those factors with current lifestyle expenses. The objective is to help clients achieve their goals while maintaining a thoughtful balance between living for today and planning responsibly for tomorrow.

Maintaining Growth

Another large gap we consistently see is not having enough growth-oriented assets, such as stocks, mutual funds and ETFs, that are tied to the stock market. Many think that once they retire, it’s time to be more reserved with their spending, but if retirement is going to last 25 to 30 years, the time horizon still supports maintaining exposure to growth.

Rather than making a sharp shift at retirement, it often makes more sense to adjust more gradually over time. Yes, this should be balanced with the client’s risk tolerance, but continued growth remains a key factor in long-term success. Without it, portfolios may struggle to keep pace with inflation, gradually reducing purchasing power.

There is no one-size-fits-all allocation. The right balance between conservative and growth assets will vary based on the client’s comfort with volatility, experiences and goals. For example, I’ve worked with clients in their 90s who still maintain more aggressive allocations, as they plan to pass assets to their children and view those investments through their children’s longer time horizon.

We need to make sure that clients not only have their basic needs met, but also have revenue-focused assets in place. This ensures both needs and wants remain attainable —even with inflation and longevity acting as ongoing headwinds.  

Building Tax Diversification

Many were taught that tax deferral is key, but they end up having almost all their retirement assets in tax-deferred accounts. That approach does not allow as much flexibility in distribution strategies or in how income is managed year to year compared to a plan with a combination of taxable brokerage assets, tax deferred and tax-free assets.

When all assets are tax-deferred accounts, planning options become more limited. In many cases, the only option is to take taxable withdrawals, which increases income. When there is a tax-diverse pool of assets, advisors can pull from non-qualified brokerage accounts, Roth IRAs or life insurance, helping manage income and reduce the overall tax burden year to year.

It’s important to have different buckets of money that each serve different needs from risk, liquidity and tax liability perspectives. This type of tax diversification can provide greater flexibility when managing income throughout retirement.

With multiple tax buckets, such as non-qualified assets, Roth IRAs and life insurance cash value, we can be more strategic about where and when to pull money to meet client goals while managing the tax impact. Starting these conversations early is especially important so clients can build these buckets over time and make small changes that can have a meaningful impact later.

Bringing It Together

Planning for longer retirement requires more than a traditional, one-dimensional approach. As retirement timelines extend, these planning decisions carry greater weight over time. The key challenges often come down to managing spending behavior, maintaining appropriate exposure to growth and building tax diversification.

By addressing these areas, advisors can help create more balanced and resilient strategies that support both sustainability and flexibility throughout retirement.

Securities and investment advisory services offered through LPL Enterprise (LPLE), a Registered Investment Advisor, Member FINRA/SIPC, and an affiliate of LPL Financial.

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