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Planning for an unknown life expectancy

  |   Investment Planning

Society of Actuaries Snip

Not a question we generally like to think about…but one that is certainly relevant as we consider how much to save, how long to work, and how much fun to have along the way.  After all, without some idea of life expectancy, it is impossible to know how to plan for the future.

According to Social Security, a man reaching age 65 today can expect to live, on average, to age 84.3.  A woman turning 65 today can expect to live, on average, to age 86.7.  However, for those with higher levels of education, living in safe communities, and with access to good medical care and healthy food options, the numbers are higher.

I was wondering about my own estimated life expectancy and ran my information through some well-respected free calculators My Abaris Life Expectancy Calculator (which can be found on the Blueprint Income site – a company that sells annuities) and True Vitality Test from Blue Zones.  They both provided a specific age, 94.9 years and 99 years, respectively (well above the averages often quoted).  Note that a downside to both of these calculators is that you have to create an account, and as with all such tools, the questions can be interpreted in a number of ways.

The Actuaries Longevity Illustrator from the Society of Actuaries and American Academy of Actuaries is a much shorter tool, you can include information for a spouse/partner, and you don’t need to create an account.  The tool doesn’t provide a specific age, but it provides probabilities and graphs that may be of interest.  It predicted I have a 56% chance of living to age 90 and a 37% chance of living to 95.

In full disclosure, it has been a few years since I updated my own financial plan.  And, the last time I ran it, I used a life expectancy of 90 for my husband and 92 for me.  And, like many of you, I need to determine if I should plan and save with the expectation of living to my mid-90s or longer, even if that means delaying or altogether forgoing things I want to do and accomplish today.

If, like me, it has been a few years since you revisited your financial plan, it may be time for an update!

AUTHOR - Tammy Wener

As co-founder of RW Financial Planning, Tammy oversees the financial planning process for all clients and manages the day-to-day operations of the firm. She truly enjoys getting to know her clients and is not shy about asking questions. Tammy has 15+ years of experience in the financial planning and estate planning fields and has worked with a broad range of clients including: couples simultaneously planning for financial independence, caring for their parents, and saving for college; newly widowed and divorced women looking to become more financially literate; young couples just starting out; families juggling the demands of a child with special needs; and financially independent individuals and couples exploring “what comes next.”