According to the U.S. Census Bureau, by the year 2010, more than 129,000 Americans will be age 100 or older; by 2050, this number is projected to grow to more than 800,000. This trend toward greater longevity is a blessing…but also a problem, if your savings don’t last as long as you do.

Age-65 retirement was originally chosen to coincide with a life expectancy of 65 years. Today, however, retirement has taken on a whole new meaning. Thanks to better health care, “life expectancies” have grown. This term refers to the age at which one has a 50-50 chance of either dying or staying alive. Thus, to be adequately prepared for retirement, you need to have funds that will last beyond your life expectancy. Retirees must expect that they may be retired for several decades.

Are Americans aware of these changes and how they demand a new approach to saving and investing for retirement? It doesn’t seem so. According to the Employee Benefit Research Institute’s 2007 Retirement Confidence Survey, 72 percent of workers are confident that they will have enough money for a comfortable retirement. However, almost half of the workers who have saved for retirement have less than $25,000 stashed away. Some workers might be counting on social security, but these benefits provide only a minimal existence. The average social security benefit for a retired worker, as of June 2007, was $960.60 a month, or $11,527.20 a year.

Many Americans, it seems, are unaware of the real possibility that they will outlive their assets. The length of time one’s assets will last depends on the assets’ earnings and how much is withdrawn annually. Inflation also figures in, because it can cause you to spend more money than you anticipate.

Take steps now to ensure that longevity doesn’t ruin your retirement. If you are still working, accumulate as much money as you can. The Insurance Information Institute offers this advice, “A deferred annuity can help you meet your retirement income goals. Employer-sponsored plans such as a 401(k), 403(b) or Keogh are an important part of planning for retirement. However, contributions to these plans and to IRAs are limited, and they might not add up to enough for the retirement income you need, especially if you started saving for retirement late or had contributions interrupted—perhaps due to job changes and/or family responsibilities. Moreover, your social security and defined benefit pension (if you have one) may provide less than you need to retire. Remember that the purchasing power of defined-benefit pension income is eroded by inflation.”

If you are retired or nearing retirement, you may want to consider longevity insurance, a type of income annuity. This product allows you to designate some of your assets to pay benefits for life, but starting at an older age, such as 75 or older. The idea is that the annuity begins to pay an income at a time when other savings may be nearing depletion. That way, you can ensure that you will have income if you are one of the Americans to reach age 100.

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