Longevity is the length or duration of your life, and it is important in retirement planning because it determines how long your assets need to support you after you stop working. Underestimating longevity is one of the most consistent mistakes my clients make when thinking about their retirement.
According to a 2012 report from the Society of Actuaries, if a male makes it to 65 there is a 40% chance he will live to age 85 and a 20% chance of living until age 90. A female, on the other hand, has a 53% chance of making it to 85 and a 31% of making it to age 90. And if they are a couple, at age 65 one of them has an almost 20% chance of making it to age 95.
So, to put it in a slightly different context, if you go to work at age 25 retire at 60 and live until 90. You will spend almost as much time retired as you do work, which means longevity is critical in retirement planning. If you do not save enough while working or if you spend too much in retirement you could outlive your resources.
If you would like to learn more about longevity or if you want to get a better idea of your longevity explore the links below.
Longevity Calculator: www.Livingto100.com
All about Longevity – Stanford Center on Longevity: http://longevity.stanford.edu/
Life Expectancy Data – CDC – https://www.cdc.gov/nchs/fastats/life-expectancy.htm
Society of Actuaries Report – https://www.soa.org/files/research/projects/research-key-finding-longevity.pdf