Why Longevity Risk Matters for Teachers, Police Officers, Firefighters & Other Public Sector Employees

Most people spend decades working toward retirement, but one risk often doesn’t get enough attention: the possibility of outliving their savings, often referred to as longevity risk.

For pre‑retirees in public service, especially those relying on a pension, this risk can be even more important to understand. People are living longer, healthcare costs have generally trended higher over time, and inflation can gradually erode purchasing power.

None of this means retirement is out of reach. It does mean it may be helpful to approach retirement income with a clear, intentional plan.

Your Pension Is a Foundation, not a Full Plan

Many public sector professionals expect their pension to cover most of their retirement needs. In practice, a pension is often a strong foundation, but it may not fully replace your working income.

For example, various analyses of public sector plans suggest that many pensions target a portion of pre‑retirement pay rather than a full replacement. Some public plans are designed so that, together with other sources like Social Security (if applicable), retirees can cover their essential expenses, but lifestyle choices, health needs, and inflation can create a gap.

This doesn’t mean pensions are inadequate; it simply highlights why coordinating your pension with savings, investments, and other income sources can be helpful.

Healthcare costs are another important factor. One estimate from Fidelity Investments suggests that a typical 65‑year‑old retiring in 2024 might expect to spend around $165,000 on healthcare and medical expenses throughout retirement, assuming traditional Medicare coverage with additional insurance. That’s an average estimate, not a guarantee, and actual costs can be higher or lower depending on individual health, location, and coverage decisions. [newsroom.f…delity.com]

How to Strengthen a Retirement Income Strategy

A comprehensive retirement strategy generally goes beyond a single product or account. It may include:

• Multiple income sources
  Coordinating pension benefits, Social Security (when applicable), and personal savings can help create more flexibility.
• Lifetime income options
  Certain financial products, such as income annuities, can provide income that is designed to last as long as you live. These tools involve costs, benefits, and trade‑offs that should be carefully reviewed in the context of your overall plan.
• Tax‑aware withdrawal planning
  The order in which you draw from taxable, tax‑deferred, and tax‑free accounts can influence how long your savings may last. Tax outcomes depend on your specific situation and the tax laws in effect, so consulting a tax professional is typically advisable.
• Healthcare and long‑term care planning
  Medicare generally focuses on medical care and does not typically cover long‑term custodial care, such as help with bathing, dressing, or eating. Having a strategy for these potential costs can help protect your other assets. [medicare.gov], [cms.gov]
• Social Security timing decisions
  The age at which you claim Social Security affects your monthly benefit. The “right” timing depends on your health, marital status, work history, and income needs.

When these elements are aligned, they can help create more predictable and sustainable retirement income, though no strategy can fully eliminate risk.

Our Approach: Education and Fiduciary Guidance

As fiduciary advisors, our role is to:

• Help you understand your options clearly
• Focus on your best interests and your specific objectives
• Explain tradeoffs, costs, and risks in plain language

We start with your pension as a base, then explore how additional investments, insurance, and planning strategies might support the lifestyle you’re working toward.

A Thought to Keep in Mind

Retirement isn’t just about numbers on a statement. It’s about confidence, dignity, and independence. With a well‑designed plan, you can be better prepared for the uncertainties of a long retirement, even though no one can guarantee a specific outcome.

Sources: [pew.org], [publicplansdata.org], [medicare.gov], [cms.gov], [newsroom.f…delity.com]