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Americans are living longer than ever before, many into their 80s, 90s, and beyond — a milestone made possible by healthier lifestyles and modern medical advances.
Extra laps around the sun bring with it a seasoned perspective on life, love, and the things that matter most. But it also changes the yardstick for financial planning.
While younger retirees typically focus on creating a sustainable income stream from their retirement savings accounts, seniors in their twilight years are more likely to prioritize:
- Managing health care costs.
- Wealth preservation.
- Maintaining their independence.
- Leaving a financial legacy.
“Financial planning in your 80’s, 90’s, and 100’s changes as many individuals experience major life events during these years, which can happen very quickly,” said Victoria Thomas of Battock Wealth Management Group in Scottsdale, Arizona. “They might encounter changing income needs, long-term care expenses, and may even have outlived their assets making these issues more challenging.”
Health care costs rise for the elderly
According to the U.S. Census Bureau, the population of Americans age 95 or older increased to 631,000 in 2020 from about 425,000 in 2010, a nearly 47 percent gain.1 And the number of centenarians, those aged 100 plus, is projected to quadruple over the next 30 years.2
The financial implications of longer life spans are significant. They include higher health care costs and greater longevity risk, or the probability of depleting one’s savings.
A typical 65-year-old couple with Medicare coverage can expect to pay more than $345,000 in out-of-pocket health care costs throughout retirement — and the bulk of those costs are incurred late in life as physical and cognitive health decline. That does not include any expenditures associated with long-term care (LTC).3
It bears noting that women are often the most financially vulnerable in old age. Why? Women live an average of 5 years longer than men. As a result, they are more likely to:4
- Develop costly chronic health conditions.
- Require assisted living care as they outlive their spouses or other would-be caretakers.
Women, on average, also have less saved for retirement than men, a by-product of the gender pay gap and their tendency to take career breaks to care for children and aging parents.5 Lower lifetime earnings not only affect their ability to save, but also result in smaller Social Security benefits. (Learn more: 5 reasons women should be financially selfish)
Regardless of gender, planning for higher costs as we age should begin as early as possible, when there is still time to implement financial strategies that may bolster our financial security, said Paul Mass, president and founder of ClearView Financial Solutions in New York City.
“Usually, a shift in financial priorities begins to occur at around age 70 or 80,” he said. “But I think most people process things more clearly earlier in retirement so they can make better decisions that may help protect their assets for their 90s and beyond.”
Connect with a MassMutual financial professional
Transfer risk
Transferring risk with adequate insurance coverage is one way to reduce the chance that you will outlive your savings.
Understanding your Medicare coverage and the supplemental insurance (Medigap) options available is essential to managing costs. (Related: Medicare pitfalls in retirement)
Indeed, seniors who live long enough are more likely to require assistance with activities of daily living.6 And Medicare generally does not cover LTC services.
For reference, the median annual cost of a home health aide for personal assistance with activities such as bathing, dressing, and eating is roughly $78,000, while a semiprivate room in a nursing home costs roughly $111,000 per year.7
The oldest seniors have fewer financial protection products available. Many LTC insurance companies have age limits for issuing new policies. And those who do find coverage may face high premiums.
Depending on their age and health, however, they may still be eligible for a hybrid product that combines long-term care benefits with life insurance.
Seniors may also still be able to purchase an immediate annuity to cover their essential living expenses. Annuities can provide a guaranteed income stream for life, which could help mitigate exposure to market risk.8 But they also come with up-front costs that make them less practical for seniors in their twilight years because they have less time for the guaranteed income to offset costs. (Related: Different types of annuities explained)
Aging retirees should always consult a financial professional for guidance on which protection products, if any, may be suitable given their health, age, financial goals, and individual circumstances.
Stretch your income by saving money
Retirees, especially those on a fixed income, may also be able to preserve their assets for longer by reducing their monthly expenses. (Related: 7 ways to increase your retirement income — without saving more)
Where possible, they should take advantage of discounts available from grocery stores, restaurants, pharmaceutical firms, and airlines, among others. Eligible homeowners may even be able to lower their property taxes with tax credits and exemptions in certain states. (Related: How to find senior discounts to save on food, drugs, travel, and more)
Housing, which is typically the largest expense in retirement, may also be an easy way to save.9
Ideally, you should allocate no more than 30 percent of your gross monthly income to housing. That includes your mortgage, rent, utilities, and maintenance. If you’re spending too much or wish to free up income for other priorities, consider downsizing to a cheaper home or relocating to a state with more favorable tax treatment. (Related: A checklist for relocating to another state for retirees)
It may also be possible to rent out a room in your home to bring in extra income, or participate in a home sharing program in which older adults share their housing in exchange for income, companionship, or assistance with household chores. (Learn more: Senior home sharing and other communal living options)
Either can potentially enable older seniors to remain living independently in their homes for longer.
The pros and cons of a reverse mortgage
Eligible homeowners who are 62 or older can also potentially tap into some of their equity through a reverse mortgage, which may enable them to take cash out as a lump sum, a regular monthly payment, or a line of credit. Generally, the cash can be used for whatever they like.10
But there are some significant potential downsides to consider. Borrowers remain responsible for property taxes, insurance, and maintenance. Failure to meet these obligations can result in foreclosure. (Related: Reverse mortgages: What you need to know)
For that reason, it is critical that seniors who are considering a reverse mortgage consult a professional to discuss alternatives. (Learn more: 3 ways a financial professional adds value)
Wealth preservation
Preserving wealth is crucial to maintaining financial stability as we age, especially in the face of rising inflation.
Older seniors can potentially help safeguard their savings by shifting more of their assets to investments that are generally considered to be conservative or lower risk — keeping in mind that past performance is no guarantee of future returns. (Related: Investor profile: Are you conservative?)
That may include Treasury bonds, dividend-paying stocks, or certificates of deposit. (Related: Conservative options for retirement: CDs vs fixed-rate annuities )
Optimizing for tax efficiency is yet another way to potentially minimize your tax liability and boost your retirement income.
Financial professionals generally recommend tapping your taxable brokerage accounts first, leaving your tax-deferred accounts invested for a longer period, which may provide additional opportunities for growth, until required minimum distributions (RMDs) begin. (Related: What is a QLAC? How can it help with RMD rules?)
Tax-free accounts, such as Roth IRAs, should generally be left for last because they are not subject to RMDs and can remain invested for as long as you live, providing the opportunity for future growth and tax-free income. (Learn more: How to lower your taxable income)
Thomas said seniors who reach an advanced age should also be mindful of any annuities they already have that may be ready to mature. Depending on the type of annuity they have (qualified or nonqualified), the payouts or earnings may be taxed as ordinary income. Income from a qualified annuity is fully taxable while only the earnings from a nonqualified annuity are taxed.
“That may create a taxable event that they didn’t see coming,” she said. “For example, consider the 95-year-old who put $75,000 away when he was 50 and now it’s in an annuity account that matures this year with an account value of $350,000. There is a deferred taxable gain of $275,000 that will be ordinary income in that year, assuming a lump-sum withdrawal.”
That gain would not only increase his income tax bracket for the year but could also potentially increase his Part B and Part D Medicare premiums, she said. Planning ahead can help to minimize financial fallout.
Leaving a financial legacy
As we mature, leaving assets to our loved ones or a favorite charity often becomes a bigger priority.
Older seniors who wish to maximize their financial legacy must be sure they have plans in place to protect their wealth for the next generation.
“It is important to review your estate plan every three to five years no matter how old you are,” said Mass, noting those who are more than 80 years old may be focused primarily on giving their grandkids a financial head start.
This requires:
- Estate Planning: Creating a comprehensive estate plan, including a will, trusts, and beneficiary designations, will help ensure that your assets are distributed according to your wishes. (Learn more: What is estate planning?)
- Gifting Strategies: You can potentially maximize the amount you leave to your heirs by taking advantage of tax-efficient gifting strategies, such as annual gift exclusions. For 2026, the gift, estate, and generation-skipping tax exemption lifetime limit is $15 million (up from $13.99 million in 2025), so taxpayers can gift up to $15 million without having to pay a gift tax. Married couples can gift up to $30 million over their lifetime tax-free. You can separately gift up to $19,000 per year, per year ($38,000 per year for married couples) tax free to an unlimited number of people.11
- Charitable Giving: Charitable giving can yield valuable tax benefits and potentially enable you to do more for the causes you care about. Consider donating appreciated stock or securities, which may enable you to deduct the fair market value of your financial donation. You can also potentially set up a charitable remainder trust (CRT), which creates a potential income stream for the donor or their beneficiaries, but designates a qualified charity to receive any assets that remain upon the beneficiary’s death. You could also consider a qualified charitable distribution. Or you can gift your life insurance policy, which may enable you to make a larger gift — of the death benefit — than you could by gifting cash. (Learn more: Using life insurance for charity)
Conclusion
Financial planning is a lifelong process. Seniors who are age 80 and older should revisit their insurance coverage, investment strategy, and estate plan to be sure it still protects their interests and reflects their changing goals.
A financial professional can offer valuable insight on ways to help protect your wealth, manage medical costs, and maximize the legacy you leave behind.
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1 U.S. Census Bureau, “2020 Census: 1 in 6 People in the United States Were 65 and Over,” May 25, 2023.
2 Pew Research Center, “U.S. centenarians propulation is projected to quadruple over the next 30 years,” Jan. 9, 2024.
3 Fidelity, “Fidelity Investments® Releases 2025 Retiree Health Care Cost Estimate, a Timely Reminder for All Generations to Begin Planning,” July 30, 2025.
4 Centers for Disease Control and Prevention, “Mortality in the United States, 2023,” December 2024.
5 U.S. Department of the Treasury, “Spotlighting Women’s Retirement Security,” Sept. 20, 2024.
6 Current Health Sciences Journal, ”Cognitive Decline in Ageing and Disease: Risk Factors, Genetics and Treatments,” June 30, 2024.
7 GenWorth, “GenWorth and CareScout Release Cost of Care Survey Results for 2024,” March 4, 2025.
8 Guarantees are subject to the claims-paying ability of the issuing insurance company.
9 SmartAsset, “The Average Retirement Budget in the U.S.,” May 20, 2025.
10 You should always consult with a tax advisor about your own financial circumstances.
11 Internal Revenue Service, “What’s new — Estate and gift tax,” July 17, 2025.
