In many cultures, to live a long, presumably happy, life is the very definition of success. But in the realm of retirement planning, living a long life can be a mixed blessing.

As life expectancies in developed countries continue to increase as a result of medical advances, so, too, do the chances that retirees who haven't saved enough will outlive their money. Many seniors who assumed they were financially set for life have learned the hard way that a retirement plan based on a life expectancy of, say, 85 may require serious cutbacks to avoid running out of money as they approach and surpass that age. At the same time, most retirees would prefer not to have to pinch pennies throughout their golden years just because it's possible they might live much longer than life-expectancy statistics would suggest. In some ways, estimating how much one will have saved by the time he stops working is the easier part of the retirement-planning equation; it's figuring out how long that money will have to last that's the real challenge.

Estimating how long each of us will live is just as important as other key retirement-planning variables such as savings rate, rate of return on your investments, and withdrawal rate. In attempting to answer this question, many people will look no further than government statistics about average life expectancies for men and women at various ages, but as we'll see in a moment, those can be of limited value.