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Your Remaining Life Expectancy for Retirement Planning

By Shane Flait

Republish: EasyPublish™ Published: 23Jun2009 Word count: 601 Viewed: 426 time(s) Get Free Content For Your Site

How long will you statistically live? You probably think that statistically you'll live to about 75. But that's somewhat of a misconception. Having a better idea on what life expectancy means will help you better project how many years of retirement you need to plan for. And clearing up what life expectancy means to you is what this article is about.

The life expectancy for people born in the year 1900 was 53. That means the 50% of them will have died by then. Of course, 50% will live longer than 53. Mortality data confirms the life expectancy of past generations. Life expectancy is statistically the '50/50' age that people will live to - as measured from a given starting age!

Today a person born in 2000 is expected to live 77 years - from birth. So 50% of them will live beyond the year 2077. The increase in life expectancy during the past century resulted from improved medical and health care. These life expectancies are based on the whole population.

Life expectancy data includes additional facts beyond age too. Among other things, it keeps track of a person's sex and socioeconomic status. Women born in the year 2000 have a life expectancy of 79.9 while that of men is only 74. Well-off white collar workers will statistically live longer then poorer blue collar workers.

If you watch your life style and health you can affect your remaining life expectancy. And it's your remaining life expectancy that's important for retirement planning. So you're not destined to kick the bucket at the 75 year mark - statistically!

Your remaining life expectancy means you have more years left for you than you think Life expectancy is based on the age from which you measure years to death. Most often we consider the beginning age as your birth. In that case, a lot of child aged deaths can eat away at the age by which 50% of all will die.

If you start at a higher age, then your expected years to death increases above what you would have expected if you measured mortality from birth. In fact, the older you get, the further beyond your original life expectancy you're expected to live!

For retirement planning, you should use your life expectancy based on starting at age 65. In that case we keep track of what percent of people who have reached 65 will die at any given older age. So the remaining life expectancy of people who have attained 65 will be the age that 50% of them have died. And that's will be an older age than the life expectancy (from birth) of those who did in fact reach 65.

Insurance statisticians keep track of this extended life expectancy for persons based on their current age. The IRS publishes its own tables on these (for required distributions of IRAs). The IRS calls it 'the life expectancy factor' which is the number of years more you have to live - statistically. You have a 50% chance of outliving these too!

Examples from the IRS table show that a person who is:

Age 60 is expected to live to 85.2 - so 25.2 remaining years to live

Age 65 is expected to live to 86 - so 21 remaining years to live

Age 70 is expected to live to 87 - so 17 remaining years to live

Age 75 is expected to live to 88.4 - so 13.4 remaining years to live

You can see that the older you live, the longer you're statistically expected to live.

In any case, a 65 year old should plan out his retirement years - for investment and income purposes as if he were going to live another 20 years or so - at least. Why? Because that's they way mortality works.

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