If you ask any individual approaching retirement what their greatest fear is, 95 percent will answer that it’s outliving their income. While this worry is not baseless, it is important to note that the most significant factor that will impact anyone’s ability to live on their retirement savings is their life expectancy. Whether someone has saved 50,000 for retirement or 5,000,000, their lifespan will dictate whether or not they will be able to live off these savings. Although 100 years ago, it was not uncommon for someone to live five years past their retirement, today, Americans’ life expectancy is at an all-time high. As a result, longevity has become a buzzword in retirement planning in recent years. Kevin Canterbury, Managing Director at Redstone Capital Management and lifelong Arizona resident, says that although it may be uncomfortable to discuss, those planning for retirement must complete a life expectancy analysis. Kevin Canterbury stresses to readers that a life expectancy analysis is the best way for retirees to set a sufficient goal for their retirement savings.
Estimate for Longevity
Today, the Social Security Administration states that a mean who reaches the age of 65 is expected to live another 19 years to the age of 84 years old. A woman who turns 65 today, on average, can expect to live another 22 years to the age of 87 years old. It is also important to note that 25% of all 65 years olds will live past the age of 90, while 10% will live past 95. These dramatic life expectancy increases also apply to younger generations as medical advancement continues. However, this can create a more unique problem for younger generations, as it will become more difficult to plan a successful retirement and maintain a comfortable lifestyle without outliving income. Unfortunately, there is no way to create an exact estimate for longevity. Overestimating or underestimating one’s longevity may result in a person outliving their income or experiencing a lower quality of life unnecessarily, which is why a life expectancy analysis is crucial in the retirement planning process.
Medical History and Family Medical History
When it comes to life expectancy analysis, perhaps the most critical consideration should be medical history and family medical history. To develop a more accurate life expectancy analysis, individuals should strive to answer the following question:
– Have you ever been diagnosed with high blood pressure, and if so, are you on medication?
– Have you ever had a heart attack or been diagnosed with heart disease?
– Do you have high cholesterol, and are you on medication?
– Has anyone in your immediate family ever had a stroke?
– Have you or anyone else in your family ever had cancer?
– Are both your parents still alive, and if not, how did they die, and how old were they when they passed away?
– Do you participate in a healthy lifestyle? Eating healthy, daily exercise, and low-stress levels?
– Have you ever smoked?
– Do either of your parents smoke?
– How often do you consume alcohol, and if so, how many beverages do you consume a week?
– Do you always, sometimes, or never wear a seat belt.
After mortality tables have been reviewed, Arizona-native Kevin Canterbury says that individuals can then decide or not they would like to add or subtract years to their life expectancy based on their answers to the questions listed above. If, for example, someone answered that both of their parents died in the late 50s of natural causes, this would constitute lowering their life expectancy by a number of years. Often, parents’ age of death is generally considered an anchoring data point for most longevity estimates, except in the event of death by unnatural causes.