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We’ve all seen the headlines about average life expectancy which the U.S. Census Bureau currently places at 78.5 years. While that number makes for an interesting statistic, it may be highly misleading when planning for retirement.

Retirement planning horizons based on average life expectancy often result in underestimating the risk of running out of money. The Census Bureau compiles its average by measuring life expectancy from birth. When life expectancy is calculated from age 65 however, the results are quite different. (See chart)

For example, the average life expectancy of a 65-year old male is age 83; for a female it’s 86; for either of them it is age 90. However, the right way to interpret this in retirement income planning is to assume roughly half the males who are 65 years old today will live past age 83. About half the females will live past age 86, and in half of all couples, at least one of the partners will celebrate a 90th birthday. Nearly 25 percent will live into their 90s. Retirement planning is not about planning to average life expectancy; it is about planning beyond life expectancy.

Without an advisor’s guidance, it’s easy for consumers to accept the national average statistic and make poor decisions based on it. A LIMRA survey noted that 59 percent of advisors expressed “major concern” about the impact outliving assets could have on their clients. Advisors need to educate clients and potential clients of the strong possibility they will live well into their 90s.

In the absence of guidance, even clients who have a sizable retirement savings account with a systematic withdrawal strategy can underestimate their longevity and exhaust their assets. One in three clients have asked their advisors about guaranteed income solutions. The time has never been better to educate consumers about annuity products that guarantee lifetime income. They also need to learn that you can’t make plans based on headlines.