Published on Jul 28, 2026 • Updated on Sep 22, 2026
This article was written by Salvatore M. Capizzi
Salvatore M. Capizzi, CEPA, CBDA, is Dunham's Chief of Sales & Marketing and a 2026 Wealthies CMO of the Year Finalist. His work focuses on retirement planning, emerging trends for financial advisors, and advanced tax, trust, and estate strategies.
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Longevity risk in retirement planning is the risk that a client outlives the savings, income strategy, or portfolio their plan was built to support. Dunham’s new white paper, Longevity Risk in Retirement Planning: Will the Arithmetic of Failure Derail Your Clients’ Golden Years?, examines how a potential 40- to 50-year retirement, inflation, withdrawal needs, and the timing of market returns can pressure traditional retirement assumptions. Built for financial advisors, the guide explores seven retirement-planning findings, including sequence-of-inflation risk, the Retirement Investment Paradox, and the Target Sustainability Rate.
Longevity risk may become a bigger retirement planning challenge if clients live 30, 40, or even 50 years after leaving the workforce.
Traditional retirement planning assumptions built around 20- to 25-year retirements may not be enough for longer health spans, inflation, sequence risk, and conservative return assumptions can compound over time and increase the risk of portfolio depletion.
The expected Great Wealth Transfer could become smaller or slower if retirees spend more assets over longer lifetimes.
Financial advisors may need to stress-test retirement income plans for longer time horizons, inflation persistence, and real-return shortfalls.
Longevity risk in retirement planning is the possibility that clients live longer than their portfolios were built to support. This paper examines how 50-year retirements, compounding inflation, sequence risk, and conservative return assumptions could weaken retirement outcomes - and turn the expected Great Wealth Transfer into what we call the Great Wealth Mirage.
Author's note: This paper is a revised version of "Is Our Industry Prepared for Retirees Living Longer?" and reflects updated thinking on the topic
There is a widely held belief in the financial services industry and among the generations who stand to benefit from it that the Great Wealth Transfer represents one of the most significant economic events of our lifetime.
The media writes about it, our industry eagerly awaits it, and younger generations have built it into their own financial expectations. With Baby Boomers holding an estimated 51.5% of the wealth in this country , the argument makes complete sense. When this generation passes, that accumulated wealth is expected to flow to the generations that follow – making it potentially the largest transfer of assets in human history.
It is a compelling story.
It is also, I believe, a story that math will not support.
The Federal Reserve’s Distributional Financial Accounts show that a concentration of American wealth is only beginning to move, and it is moving slowly. As of the first quarter of 2025, Baby Boomers control 51.4% of all household wealth in the United States, a figure that has declined only modestly from 54.7% in 2019.
Meanwhile, Millennials, who represent a nearly equal share of the American population, have increased their wealth from 4.1% to 10.3% over the same period. It is a meaningful gain on paper, but it leaves them holding barely a fifth of what Boomer’s control. Gen X has made modest progress, rising from 24.7% to 26%, while the Silent Generation’s share has steadily declined as that group has entered its final years.
The numbers imply wealth in motion, just as we have discussed for a decade now.
But is there a better set of assumptions on which our industry can more fully focus?
Our current assumption is that Boomers will keep retiring, spend their assets at a predictable rate, and pass the remainder to their heirs in a transfer described as the greatest in history. But let us stop for a minute to consider a question that matters deeply to financial advisors and their clients.:
What happens to that transfer if Boomers live decades longer than planned, invest under our industry’s retirement assumptions, and their planning falls short of their actual life spans?
Said another way, what if with a longer life span, the math our industry is using to build portfolios means clients will arrive at the end of life with far less to give than anyone anticipated, and, potentially, with nothing?
What the industry has long called the Great Wealth Transfer may turn out to be the Great Wealth Mirage, a number that looks certain on paper until the years keep adding up and it is simply no longer there.
For me, this question is not theoretical.
It is the foundation of everything that follows.
The conventional explanation for why the Great Wealth Transfer may fall short centers primarily on healthcare costs, the expense of long-term care, and the financial burden of living longer with more illness.
It is a reasonable argument, and one that has received a great deal of attention in recent years. It makes people like me think harder about what we do as asset managers and what financial advisors do as wealth managers and retirement planners.
The premise is simple:
We, as an industry, may be directing our attention to the wrong villain entirely, because the evidence increasingly suggests that science and artificial intelligence are on the verge of fundamentally altering the healthcare cost equation.
Anthropic CEO Dario Amodei, in his landmark 2024 essay, projected that powerful artificial intelligence will eliminate most diseases, including cancers and Alzheimer’s, within 7 to 12 years of its development.
It seems this 7-to-12-year estimate may be here sooner than we think, as AI advancement has been exponential of late.
Want evidence that this could be a reality and that AI is moving faster than even Dario Amodei projected two years ago?
In a May 29, 2026, Wall Street Journal article titled “A Famous Math Problem Stumped Humans for 80 Years. AI Just Cracked It” caught my attention.
It described how an OpenAI model resolved the unit distance problem - a puzzle in combinatorial geometry that had defeated generations of the world's most accomplished mathematicians. It did this autonomously, without a single human scribbling an equation, and it produced proof that was so compelling that Fields Medal winner Timothy Gowers said he would have recommended it for publication in one of mathematics’ most prestigious journals without hesitation.
The same computational ability that identified a pattern invisible to human minds for eight decades can now be directed at the complexity of human disease, and the implications for how long people may actually live - happy and with long health spans - could be profound.
Anthropic’s chief executive has stated his belief that AI will discover cures for diseases that have resisted every human effort to crack them, and if the unit distance problem teaches us anything, it is that the final equation in an almost century-long puzzle can arrive suddenly, without warning, and from a source no one anticipated.
The retired clients sitting across the table from us today may live inside that breakthrough, which means the retirement plans we are building for them must be prepared for a health span and lifespan that no historical financial model has ever had to account for.
Which brings us to the more difficult and more important question.
If healthcare is not the primary reason the Great Wealth Transfer will not occur as anticipated, what is?
The premise points to an answer that is deeply uncomfortable for our profession, because it places a significant measure of responsibility directly on the financial planning industry itself.
For decades, our industry has built retirement portfolios around a model designed for a world in which retirement lasted 20 to 25 years. That model reflected exactly what it should have at the time. The strategies it produced were conservative allocations, bucket approaches, fixed income vehicles, and the 4% withdrawal rule, all of which were entirely appropriate for the retirement expectations that existed when they were recommended to clients.
The problem is that the retirement landscape may be changing in a completely dynamic and profound manner, and our planning mathematics has not kept pace with that change.
Today’s 65-year-old may live another fifty years.
Maybe more.
And a portfolio that was built for a twenty to twenty-five-year retirement may not survive a fifty-plus-year one, not because of market crashes or catastrophic illness, but because of the , compounding, mathematically inevitable erosion that even modest inflation inflicts on a portfolio that was never designed to sustain purchasing power across five or more full decades.
Think about what that arithmetic actually produces in practical terms. A couple retiring today, spending at entirely normal levels, will consume an estimated almost $2.6 million on food alone over a fifty-year retirement.
A portfolio earning a net 4% annual return, which our industry has long considered prudent and protective, could be completely exhausted by year thirty-four.
Even a net 5% return, which many would consider adequate in retirement, could fail entirely by year forty-three. These outcomes assume nothing more alarming than the Federal Reserve achieving its own stated 2% inflation target, and they are not worst-case Monte Carlo projections.
They are the mathematical consequence of applying a twenty-year planning model to a fifty-year-plus problem.
The new white paper with the same title as this article has new information and insights based on our foundational paper, Is Our Industry Prepared for Retirees Living Longer
It presents seven interconnected findings that together form what we believe is a compelling mathematical case for why the Great Wealth Transfer may not occur as anticipated, and why the financial planning profession bears a responsibility to confront this reality before generations of retirees outlive the plans we built for them.
The traditional understanding of sequence risk is dangerously incomplete.
Being overly conservative in the early years of retirement creates its own form of sequence risk—one that slowly and inevitably depletes retirement resources in what we call the Retirement Investment Paradox.
Sequence of Inflation Risk shows that the timing of inflationary periods across a retirement is important for portfolio survival.
Even when two clients experience identical average inflation rates, the timing of those inflationary periods can result in dramatically different financial outcomes, depending entirely on when that inflation appears.
The Longevity Inflation Impact is our finding that, while the returns required to sustain a fifty-year retirement increase in a linear progression with inflation, the pace of portfolio depletion when those returns are not achieved accelerates exponentially.
So, what appears to be a modest shortfall in returns could produce a catastrophic acceleration toward portfolio failure.
The Target Sustainability Rate shows that, potentially, even under the Federal Reserve’s own 2% inflation target, a retirement portfolio requires a minimum net return of 6% to survive fifty years of withdrawals - a threshold that most conventionally structured retirement portfolios are not designed to reach.
The Retirement Real Return Rule says that sustainable retirement planning is not fundamentally about achieving any specific nominal return, but rather about maintaining a spread of 4 to 5 percentage points above the prevailing inflation rate over the full duration of retirement.
That single mathematical relationship makes most of what our industry calls conservative planning insufficient for the retiree who may live another fifty years.
Multi-Generation Retirement, perhaps the most far-reaching concept in this research, describes the cascading effect that occurs when one generation’s retirement assets are depleted by obsolete planning.
The financial burden is then forced onto the next generation, which must simultaneously fund its own retirement while supporting parents - and potentially grandparents - who outlived their assets, ultimately eliminating the inheritance that was supposed to occur during the Great Wealth Transfer.
The point in this paper is that, as an industry, we need to be aware that wealth may not be consumed by illness.
It may be eroded year-by-year by longer health spans, by an industry still using twenty-year tools to solve a fifty-year-plus problem.
This paper is our attempt to change that.
Read the complete analysis, methodology, calculations, and supporting illustrations behind these seven findings in the full white paper.
What is longevity risk in retirement planning? Longevity risk is the chance a client outlives the income plan and portfolio built to support them. It's one of the biggest challenges in retirement planning because nobody knows exactly how long they'll live. The risk grows with decades of withdrawals, persistent inflation, lower real returns, or a surviving spouse who lives well past average life expectancy.
How should financial advisors plan for a 50-year retirement? Advisors should stress-test income plans across longer time horizons than the old 20- to 25-year model. That means running scenarios for withdrawal needs, inflation, sequence-of-returns risk, longevity gaps between spouses, taxes, healthcare costs, and lower-than-expected real returns. The goal is simple: check whether the income strategy still holds up if retirement stretches to 40 or 50 years.
What is sequence-of-returns risk in retirement? Sequence-of-returns risk is the danger that poor market returns early in retirement shrink how long a portfolio can support withdrawals. Selling investments during a downturn locks in losses, leaving less money to grow when markets recover. This means the order returns arrive in can matter just as much as the average return over time.
What is sequence-of-inflation risk? Sequence-of-inflation risk is the danger that inflation hits at a bad time in retirement, particularly in the early years when withdrawals are just starting to compound. Two retirees can face the same average inflation rate over 30 years and still end up with very different outcomes, depending on when the highest-inflation years actually occur.
Dunham — The Retirement Investment Paradox: Growth vs. Safety in a Longer Retirement dunham.com
Yahoo Finance — Whitepaper: Traditional Retirement Planning Approaches May Be Outdated and Ineffective finance.yahoo.com
Dunham — What Is Sequence of Returns Risk? How It Threatens Your Retirement dunham.com
Dario Amodei — Machines of Loving Grace darioamodei.com
Federal Reserve — Distributional Financial Accounts Overview federalreserve.gov
Federal Reserve — Why Does the Federal Reserve Aim for Inflation of 2 Percent Over the Longer Run? federalreserve.gov
Social Security Administration — Actuarial Life Table ssa.gov
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance. All examples are hypothetical and are for illustrative purposes only.
Information contained in the materials included is believed to be from reliable sources, but no representations or guarantees are made as to the accuracy or completeness of information. This document is provided for information purposes only and should not be considered as investment advice.
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