3 ways to make your money last in retirement

Senior couple retirement
How to save for a long and healthy life   

Older Americans are living longer than ever with a record high life expectancy of nearly 79, according to the latest research from the National Center for Health Statistics. Women generally live longer than men, to an average of 81. That means for many couples, at least one spouse will live into their 80s, 90s or even to beyond 100.

If that happens, you want to make sure you don't run out of money when you're 85. How can you ensure that your nest egg will last through your final years?

Senior couple financial planning
Jamie Grill | Iconica | Getty Images

1. Plan for at least two or three decades inr etirement. The most recent NCHS data show someone now 65 is expected to live at least 19 more years. It's likely you could live that long, or longer, if you are in good health and your parents and grandparents lived a long life.

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2. Save as much as you can in your tax-advantaged retirement accounts—401(k)s and IRAs—as well as taxable accounts for long-term investments. A married couple can stash away up to $36,000 in 401(k)s this year (up to $48,000 if they are 50 or older.)

Maxing out on regular or Roth IRAs will add another $11,000 to a couple's nest egg in 2015, or $13,000 if you're both 50 or older. But few Americans can save that much every year. Many are facing a retirement savings shortfall: A recent EBRI survey shows for those on the verge of retirement savings deficits can vary from about $19,000 to nearly $63,000.

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3. Some financial advisors suggest buying longevity insurance, a type of deferred annuity that offers guaranteed income for life, to help supplement retirement savings later in life.

Here's how it works: You invest money upfront—at say 55 or 65—in exchange for future payments. (Longevity insurance doesn't usually kick in until you're about 85.) The payout benefit is calculated at the time that you invest, usually just before or after you retire.

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The size of the payout is based on how old you are when you buy the insurance. Generally, the younger you are when you buy it, the larger the annual benefit. But there is a big downside: You either use it or lose it. If you die before the benefit kicks in, the money you put in is lost.

Still, several insurers have recently launched longevity insurance contracts for 401(k)s and IRAs and some financial advisors say it may be worth investing a small part of your portfolio in a longevity annuity contract, in addition to owning stocks, bonds and other assets. It's another way to further diversity your nest egg since you may live longer than you expect.