Longevity risk is the possibility that you'll live longer than expected and outlive your retirement savings—running out of money before you run out of life. While living a long life is wonderful, it becomes a financial challenge when your savings need to stretch for 30 or even 40 years in retirement instead of the 15 or 20 years you might have planned for.

This risk is becoming more significant as life expectancy increases. A healthy 65-year-old couple today has a roughly 50% chance that at least one of them will live past age 90, and a 25% chance one will reach 95. Healthcare advances mean more people are living into their 90s and beyond, which is fantastic—but it also means your retirement nest egg needs to last much longer than previous generations required.

Managing longevity risk requires a combination of strategies: maximizing guaranteed lifetime income sources like Social Security and pensions, considering annuities that provide income for as long as you live, maintaining a portion of your portfolio invested for growth to outpace inflation, planning conservatively by assuming you might live longer than average, and staying flexible to adjust your spending if needed. The goal isn't just to have enough money to retire—it's to have enough money to stay retired, regardless of how long that turns out to be.