• Effective retirement planning largely depends on the answer to one question: How long will I live?
• Yet no one truly knows the answer to that question.
• Here's what experts say you should consider to best gauge your plans.

To effectively plan for your retirement, experts say, you need to watch your savings rate and total nest egg.

But how much you really need to have set aside depends on another number — your life expectancy.

Yet that figure is also the most elusive — no one knows how long they will live.

"Nobody really knows, and that uncertainty is uncomfortable," said Lisa Schilling, director of practice research at the Society of Actuaries Research Institute, the research arm of the Society of Actuaries.

The financial industry typically uses age 95 as a default assumption, according to research from HealthView Services, a provider of health-care cost projection software.

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Instead of planning for one life expectancy number, the Society of Actuaries and American Academy of Actuaries emphasize longevity.

Longevity risk measures the likelihood someone may live longer than expected and outlive their savings.

"If you read that life expectancy is 84 and you are planning on your money lasting until 84, there's a big surprise behind the curtain that you haven't opened," Schilling said. "There's a really good chance for a lot of reasons that you might need your money to last longer than that."

Longevity estimates may bring surprises

The Society of Actuaries and American Academy of Actuaries recently relaunched a free online longevity illustrator.

The tool asks for basic information on either an individual or a couple: age, sex, retirement age, smoking status and a description of their general health — poor, average or excellent.

The results aim to provide a "reasonable" estimate of how long you might live, according to the organizations. The illustrations show the probability of living to certain ages, as well as the number of years of life one might live in retirement.

Generally, the higher your current age, the greater the possibility you may live longer. While life expectancy at birth may be 84, it will be even longer if you've already made it to age 65, Schilling said.

The results may help individuals fully understand the range of possibilities when planning for how long their money may need to last, she said.

For couples, there is also another revelation that often comes as a surprise. "The chance that at least one of you lives to 90 is even bigger," Schilling said.

Yet the financial industry's assumption of living to age 95 may be too generous, according to recent research from HealthView Services.

The projected life expectancy for someone who is 65 years old today with no chronic conditions is age 90 for women and age 88 for men.

Yet only around 5% of people over 60 have no chronic conditions, according to the research.

Health status affects life expectancy projections

Chronic health conditions such as high blood pressure, cardiovascular disease, cancer, diabetes, high cholesterol, tobacco use, obesity or Parkinson's disease reduce an individual's projected life expectancy.

For example, while a healthy 65-year-old man with no chronic conditions has a 19.3% probability of living to age 95 or longer, that gets reduced to a 17.5% chance if he has high blood pressure, 15.8% if he has cardiovascular disease, 12.5% for high cholesterol, 8.8% for obesity with a body mass index of 35 to 39, 7.4% for tobacco use, 2% for obesity with body mass index of 40 to 44 and to just 0.4% for diabetes, according to the research.

Those probabilities could mean a huge difference to his retirement funding needs. A healthy 65-year-old man may need around $1.1 million to maintain the 80% income replacement rate he needs if he was earning $100,000 in 2023, according to HealthView Services. This assumes he lives to age 95, has a 6% annual portfolio return, receives Social Security benefits, and inflation is 3%.

However, if that 65-year-old man has a chronic condition, his life expectancy will be lower. And that could free up more of that retirement nest egg to be spent in other ways, according to HealthView Services.

High blood pressure could reduce his life expectancy by nine years to age 86, and therefore allow for $447,469 to be used for long-term care planning, emergency savings, money for heirs or other uses, the research found.

Tobacco use could reduce his life expectancy by 13 years to 82, freeing up $616,245, the research estimates, while diabetes may reduce his lifespan by 16 years, enabling him to spend $727,947.

Most experts advise individuals to plan for outliving their assets by delaying Social Security retirement benefits or considering an annuity to amplify monthly income.

How personalized numbers can help

But considering an individual's specific health status and how that affects their life expectancy can help personalize financial plans, according to Ron Mastrogiovanni, CEO of HealthView Services.

"During a planning process, people are more likely to take action if numbers are personalized," Mastrogiovanni said.

That doesn't necessarily require eliminating age 95 assumptions altogether, he said.

But letting someone know their personal life expectancy can help provide a more reasonable sense of an age to plan to.

"That doesn't mean you choose that number" to plan to, Mastrogiovanni said.

"Whatever makes you comfortable; you want to move out four years, 10 years, you can do that," he said.

"But at least you're working off an actuarial base number."