Are You Underestimating Your Life Expectancy?

The longer you live, the longer you can expect your life expectancy to be.

The Centers for Disease Control (CDC) estimates that a male born in 2011 has a life expectancy of 76.3 years. For a female born in the same year, her life expectancy is 81.1.1 Yet, if they live to age 65, they can expect to live until 84 and 86, respectively. The male who ends up living to age 84 can now expect to live to almost 91!

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So What is Life Expectancy?

To understand these figures, you need to know that life expectancy is nothing more than a mathematical calculation of the general population. The reason that life expectancy is lower at birth than at age 65 is recognition that individuals will die prematurely whether due to accidents, illnesses or other causes, which has the effect of dragging down the average length of life.

While most individuals know that they can expect to live longer than the generations that have preceded them, many underestimate how long they expect to live in relation to the overall population.

For instance, according to a survey by the Society of Actuaries, 54% of retirees do not believe that they will live as long as the average person of their age and sex, while 46% of pre-retirees hold a similar belief. This same survey found that most individuals would be very likely or somewhat likely to reduce their expenditures significantly if they were to live five years or longer than expected.3

Life Expectancy in the Medical Tech Age

Compounding this increasing longevity and the propensity of many individuals to underestimate their personal life span is the unknowable degree to which future medical advances will further lengthen life. Whether it is new research breakthroughs, personalized drug therapies or smarter lifestyle choices, the trajectory of longevity appears to be headed higher still.

What’s Life Expectancy Mean for Retirement?

Of course, increasing life spans have dramatic implications for how individuals plan and save for their future. The risk of out-living savings will continue to grow more acute, leading an increasing number of retirees to look for lifetime income guarantees to protect them in their retirement.

  1. http://www.cdc.gov/nchs/fastats/lifexpec.htm
  2. http://www.socialsecurity.gov/cgi-bin/longevity.cgi
  3. http://www.soa.org/News-and-Publications/Newsroom/Press-Releases/2012- 07-30-retirees-under.aspx

 

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2015-2822 (Exp. 02/17)