Playing the Retirement Longevity Game

All retirees and pre-retirees need to think about their life expectancy a/k/a longevity. There are at least two important reasons for this. First, one goal of your retirement plan is to limit the risk that you will outlive your money. Second, anticipated longevity is a key factor in deciding the age at which you want to claim Social Security retirement benefits.

Let’s assume that I want to retire (i.e., stop working entirely) at my full retirement age (FRA) of 66. At that point, I will need to live on draw downs from my retirement accounts plus Social Security, unless I wait until age 70 to claim benefits, which is my current plan.

This raises the question of how long I will need to rely on income from my retirement accounts. Will it be twenty years until age 86? Or thirty years until age 96? Or do I expect (as some boomers do) to die before I reach age 79? (Age 79 is the typical break-even point calculated for total Social Security benefits received from early vs. late claiming.)

From my research, there are two relatively equal components of the longevity analysis: genetics and lifestyle.

Both of my parents are still alive at ages 89 and 86. However, both of my grandfathers and one of my grandmothers died at much earlier ages. This makes me think that lifestyle will be more critical to my lifespan.

So how do you estimate your personal life expectancy?

That’s where the Retirement Longevity Game comes into play.

You “play the game” by answering twelve questions about yourself. A few minutes later, an estimate of your longevity in years is displayed.

It’s is interesting to see how the life span estimate goes up and down in response to your various responses.

Playing the game, my estimated life expectancy is 93 years. If this age is even close to accurate, to be confident in a retirement plan that starts at age 66, I need my money to last 27 years. If I live beyond that, maybe I won’t care how much money I have!

One other advantage of playing the retirement longevity game: If your estimate is much shorter than you would like, it may kick you in the pants to make some lifestyle changes.

So what’s your number?

 


Comments

  1. Doris says

    I felt compelled to respond to the article. I took the longevity quiz and was happy to see my results—I am supposed to live to age 96. I have two strikes against me , however. I had breast cancer at age 44 and it reoccurred seven years later when I was almost 51 years old. That was 13 years ago. I gave up smoking long time ago and I exercise five days a week, cardio, weights, treadmill, for 45 minutes each time. I don’t have any breathing issues and can run the track , not for long, but at least can make it half way around. Because of my health history, I decided to take my SS at age 62—it made sense to me and who has a crystal ball in relation to life span? My TSP account continues to grow and last five years since I retired I am up way more than the difference in monies than waiting until age 66 to collect my SS payments. Life is always a gamble —I chose the sure thing (taking my SS early) and for me, it works.

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