How long you expect to live is a major factor in determining how much you need to accumulate by retirement age. Since most people don't know how long they'll live, average life expectancy is typically the starting point for this estimate.
For instance, based on current actuarial tables, a 65-year-old woman's average life expectancy is 20 years and a 65-year-old man's life expectancy is 17 years (Source: Journal of Financial Planning, August 2008). If a woman plans to retire at age 65, is it sufficient to ensure she has funds to last until age 85? Average life expectancy means the woman has a 50% chance of living beyond age 85 and a 50% chance of dying before age 85.
Since you don't know which will apply to you, it's usually better to be conservative and assume you will live at least a few years beyond your average life expectancy. This can prevent you from running out of funds late in life. When deciding how many years to add, consider your health as well as how long other family members have lived.