How long you may live is one of retirement planning's biggest unknowns. How experts say to get the best estimate
How do experts suggest estimating life expectancy?
Experts suggest considering factors such as age, sex, retirement age, smoking status, and general health to estimate life expectancy. Tools like the Society of Actuaries and American Academy of Actuaries' online longevity illustrator can help provide a reasonable estimate of how long you might live based on this information. It's important to remember that these are just estimates and actual life expectancy may vary.
What is the key unknown in retirement planning?
The key unknown in retirement planning is life expectancy, as it significantly affects how much savings one needs to accumulate for retirement. Since no one knows exactly how long they will live, it creates uncertainty in financial planning for retirement. Experts recommend considering personal health status and using longevity estimates to better gauge retirement plans.
How does health status affect life expectancy projections?
Chronic health conditions such as high blood pressure, cardiovascular disease, cancer, diabetes, high cholesterol, tobacco use, obesity, or Parkinson's disease can reduce an individual's projected life expectancy. For example, a healthy 65-year-old man with no chronic conditions has a 19.3% probability of living to age 95 or longer, but that chance is reduced with the presence of any of these conditions.