Call Our Offices
Your Money.
Your Life.
Your Way.
article
Reasons You Should Plan to Live Until You're 95
Shared by Strong Valley on October 17, 2022
Reasons You Should Plan to Live Until You’re 95
Image of a stop watch for the in-brief section heading
IN BRIEF
Here's a quick look at what's in this article:

Anchor your financial planning on how long your money needs to last. This article takes a look at two well-known tables for life expectancy managed by the Social Security Administration which gives you a point of reference when thinking about how much longer your money needs to last. Instead of fear of outliving your money, there is a way to incorporate that uncertainty into your financial plan.

Important Disclosure: Content on our website and in our newsletters is for informational purposes only. The information provided may (or may not) directly apply to your situation. We recommend that readers work directly with a professional advisor when making decisions in the context of their specific situation.

How long do you think you will live? How long does your money need to last? If you’re like most people, you get this age wrong.

The consequence? Faulty retirement planning, overspending now and running out of money before you actually reach your true longevity. Or spending too little now, depriving yourself of a comfortable retirement before your death.

It's a Tough Call

Your longevity is the statistically expected number of years of life you have remaining at a given age – specifically, your current age. (Your longevity depends on other factors and you can find calculators with good insights into these by Googling “life expectancy calculator”).

There are two well-known tables for life expectancy managed by the Social Security Administration: the Social Security general population table and the Annuity Table. The tables constantly change with shifting demographics, lifestyles, medicines and other advances. Today’s tables may, therefore, understate longevity, especially for younger people.

Let’s look at a couple of examples to get a general sense of longevity, using the “Retirement & Survivors Benefits: Life Expectancy Calculator” created by the Social Security Administration. This chart, from the Social Security table, gives you a point of reference when thinking about how much longer your money needs to last.

  • If you’re a male born on November 14, 1955, you can expect to live 17.9 years to age 84.4
  • If you’re a female born on November 14, 1955, you can expect to live 20.4 years to age 86.9

While this might be decent guidance, keep this in mind: these figures do not take into account a wide number of factors such as current health, lifestyle, and family history that could increase or decrease life expectancy.

Healthy Living = Longer Living

Let’s use another example, someone who is currently 85 years old. According to the Social Security Administration:

  • If you’re an 85-year old male you can expect to live another 6.4 years to age 90.9 and
  • If you’re an 85-year old female you can expect to live another 7.5 years to age 92.0

In other words, at age 85 you may have seven or more years remaining – illustrating the importance of understanding your life expectancy when you plan retirement spending.

Further,  the “healthier” population subset enjoys a greater number of remaining expected years compared with Social Security’s general population. In some cases (depends on age), about 60% of the 70-year old “healthier” population may outlive members of the general population due to lifestyle choices, lack of accidents and other similar factors (including just plain luck).

Plan for 95

That’s why many financial advisors suggest planning to age 95. Such advice can reduce how much you spend today just in case you live to 95.

Further, financial advisory best-practices suggest adjusting spending over time. Instead of guessing an age you think too old to imagine, anchor your expectations on how long your money needs to last using statistics for your population group. Update that expectation each year during your annual financial review.

Rather than fear outliving your money, embrace uncertainty through a structured process that incorporates uncertainty into your financial decisions. Life is full of uncertainty and forks in the road. You can prudently manage your retirement money surer than that.

The information contained within is believed to be from reliable sources. However, its accurateness, completeness, and the opinions based thereon by the author are not guaranteed – no responsibility is assumed for omissions or errors. The views expressed herein reflect our judgment now and are subject to change without notice and may or may not be updated. Nothing in this document should be construed as investment, tax, financial, accounting, or legal advice. Each prospective investor must make their own evaluation and investigation of any investments considered or of any investment strategies described herein (including the risks and merits thereof), should seek professional advice for their particular circumstances, and should inform themselves as to the tax or other consequences of any investments or services considered or described herein. Please see other important disclosures related to StrongValley.com

Your turn – What would you like to know about Reasons You Should Plan to Live Until You're 95?

Strong Valley wants to provide useful and meaningful information to our clients, to our professional network, and to the broader community of people we serve. We’d love to hear your questions about Reasons You Should Plan to Live Until You're 95 or about any other topics you care about. You can call our office directly, or use the contact form below to send us your questions and/or suggestions.  And if you found the information helpful or entertaining, we hope you'll share the Strong Valley story with others.

We love to hear your questions, ideas, and feedback!

  • This field is for validation purposes and should be left unchanged.
Copyright © 2022 Strong Valley Wealth & Pension, LLC
Investment advisory services are offered through Laurel Wealth Advisors, Inc., an SEC registered investment adviser. Registration with the SEC does not imply a certain level of skill or training. Strong Valley is a dba used when offering securities and/or advisory services. Securities are offered through M.S. Howells & Co. a registered broker/dealer and Member FINRA/SIPC. M.S. Howells & Co. is not affiliated with Laurel Wealth Advisors, Inc or Strong Valley. None of the entities listed provide legal or tax advice.