How Long Will You Live In Retirement?
Introduction
In the summer of 1996, my father woke me up in the early hours of the morning. Still dark, I opened my eyes, just barely able to make out his figure standing over my bed. "Grandpa died this morning,” he said.
My grandfather was a World War II veteran, a factory worker, a lifelong Philadelphia Phillies fan, and father of nine. His wife, my grandmother, passed away when I was only four or five years old. Because of that, I remember him much more. His home on Broad Street in Lititz, Pennsylvania was two short blocks away from my elementary school. My parents arranged for me and my twin brother to go directly there when school let out, until one of them could pick us up after their shifts.
My memories of him mostly include the fact that he had to turn on the television for it to “warm up” (literally, the screen took about one hour to slowly come into view) so we could watch cartoons, and the fact that he had unique kinds of candy that I never got at home (we were an M&Ms household, his was a varieties-of-chocolate-covered-nuts-and-fruits-from-the-bulk-section-of-the-grocery-store household.)
But more than that, I remember - from as early as I can, until he passed - that carried around some kind of tank, with tubes that ran out of it, and into his nose. I didn’t understand what it was, or why he needed it. But I remember just thinking he was old, and that was probably why. I didn’t understand that he smoked cigarettes, like many men of his age, starting when he was a teenager, through early adulthood and active military duty. I’m not sure when he quit, but I never got a hint of cigarette smoke in his home when I visited. Cigarettes had already made their impact.
He was 76 years old when he passed away. What I remember most about him, from my last memories of him, is just how old he seemed to me at the time. He walked with a unique gait, possibly from knee or hip issues, though I can’t be sure. He struggled to breathe, even with an oxygen tank assisting him. He still had a head full of dark colored hair, but his skin was wrinkled, and his jowls sagged.
Why ‘Old’ Isn’t What It Once Was
It’s been thirty years since he’s passed away. What I’ve observed since then - both anecdotally, and through awareness of increasing longevity that comes with my profession - is just how different “old” seems now. Let me give you an example. I’m a distance runner, and I routinely join weekly group runs with my local running store. I haven’t surveyed the regulars, but I’d guess that most are in their 20s, 30s or 40s, with fewer in the 50s, and fewer yet in their 60s. But there are two men who regularly join who are in their early to mid seventies. These guys don’t just run small, community, 3-mile races. They run half marathons, and even marathons - in their seventies! To say I admire them is a complete understatement. They inspire me to care about my health. And they both could easily pass for their early sixties - a testament to just how much routine cardiovascular exercise benefits the body at any age.
I couldn’t have understood when my grandfather passed away that “old” relative (ironically, just like “rich” or “wealthy”). I couldn’t have understood then that a lifetime of cigarette use surely contributed to him appearing “old.” Chronic stress from active duty service during World War II (and being a Phillies fan) may have played a role.
Personal Responsibility Instead of Pensions
My grandfather was a man of modest means. He wasn’t wealthy; he had no financial advisor - in fact, I doubt he ever invested a penny in stocks - and because he was from a generation when businesses rewarded decades-long service with pensions that often more than covered retirement needs for life, it’s doubtful he ever had to factor his mortality into his financial decision about when to retire.
It’s a different story for retirees today. Many businesses, like my grandfather’s employer, have now frozen their pensions, and forced employees to select defined contribution retirement plans, such as 401ks. The risk that was once on them to appropriately manage pensions now falls primarily on workers, who have to be sure they save the right amount, which is its own mysterious target based on the variety of income strategies available to them - ones that people who had simple retirement income sources like pensions and Social Security never had to think about.
The Risk of Retiring Without Longevity Planning
When someone retires today, they burden is on the worker to ensure their assets are enough. What’s “enough” can vary dramatically from person to person, especially when you factor in longevity - especially a longevity projection based on your unique health and family history.
Plan carelessly, and you risk withdrawing too much from your retirement savings, spending them down, and being forced to make big decisions when you’re least physically capable - in your eighties or nineties. Plan too conservatively, and you risk missing out on a more meaningful, fulfilling retirement - something you might not realize until you’re already in your nineties.
Planning with your unique longevity in mind addresses this.
Averages Aren’t The Whole Story
Statistics tell a story about how long the average person retiring today will live. The Social Security Administration has a great tool for doing just that - but even it says that its life expectancy estimates don’t account for a wide number of factors such as health, lifestyle, and family history. Averages are great, but why not get more specific, and give yourself a better idea of what your chances of having a decades-long retirement will be? For example, a woman whose mother and grandmother lived until age one hundred is far more likely to live much longer than average. Therefore, using averages - even conservative ones - could mean an empty investment portfolio in her early nineties. While that doesn’t automatically mean ending up homeless on the streets, it could mean forced financial choices, or burdening loved ones with her financial needs.
On the other hand, a man whose father, grandfather, and uncle all passed away from cancer is himself at greater risk. This isn’t news to him - and medicine is constantly improving - but what do his odds say about living beyond the averages? It could be much more meaningful to determine his unique longevity chances. It could be the difference in a quality retirement filled with experiences, and one that was more careful than necessary.
But family history, tobacco use, and activity level are only a handful of factors in longevity. Studies show that education, marital status, stress levels, income - and more - all play a role in life expectancy. The question is whether there are any good tools out there that explore all of those dimensions, and give us a reliable estimation as a result.
Three Life Expectancy Calculators Worth Trying
One of the most thorough calculators is The Living To 100 Life Expectancy Calculator. (Before you visit, just know that you’ll need to create a login to view the results of your 40 question test.) Unlike many online calculators, this one is very robust - asking about everything from how much cheese you eat, to your LDL cholesterol levels (there’s an option to say you’re unsure if you don’t have that.) It’s also unique in that it was created by a medical doctor, Thomas Perls. Perls is known for the New England Centenarian Study, which is “the longest-running largest study of centenarians and their family members in the world.” His credentials and research resume give this calculator a leg-up on others, in my opinion - even if the website is a bit dated, and the wording of the questions feels a bit confusing. (By the way, don’t forget to change your height and weight in the dropdown boxes before submitting your answers - they’re kind of hidden at the top.)
If you’re not interested in answering forty questions and creating logins, you have options. There’s a simple, one-page calculator available on the University of Connecticut’s Center for Actuarial Research website. The downside is that family history is completely absent from this calculator, so unless your family history is the picture of health, I’d take the results with a grain of salt. The Living to 100 Calculator gave me a life expectancy of 88, but since I’m a runner and family history wasn’t brought into question in UConn’s survey, my life expectancy result was age 96.
There are a myriad of life insurance companies that have free longevity calculators on their website. John Hancock’s asks questions about your lifestyle and health, but doesn’t take family history into account, either - so whatever your result, you should think about your family’s longevity and factor that into the likelihood you’ll actually reach that number, or live beyond it.
Conclusion
There isn’t a perfect way to predict exactly what age you’ll live to. The retirement puzzle would be much easier to solve, if it were. Nevertheless, considering your own lifestyle and family history can have a meaningful impact on what any calculator will tell you, or what your assumptions should be.
A big part of retirement planning is about managing risk. A prudent retirement planner should factor your unique circumstances into your plan, and should err on the side of caution before advising how much you should save, how much you can safely withdraw from retirement accounts, and the best time to file for Social Security benefits. That said, a retirement planner (and the plan they build for you) is just a roadmap. Like traveling to new places, there are unexpected bumps in the road. But that doesn’t mean that nothing is in your control. You have the power to make knowledgeable, educated choices when building your retirement plan. Planning for unique longevity is only one of them, but it’s a big one. Don’t retire without giving it serious thought.
Scot Whiskeyman, CFP® and Lindsey Ciarrocca, CMC® are independent, fiduciary husband-and-wife financial planners, serving pre-retirees and widows nationwide. They help people approaching retirement make clear decisions with the full picture in mind. They primarily work with widows of any age, or diligent savers between age 50-60 with $500,000 or more investable assets.
This article is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. Providers & Families Wealth Management is not affiliated with, and does not endorse, sponsor, or guarantee the accuracy, completeness, or reliability of any third-party websites, tools, or calculators referenced herein. Use of any such tools is at your own discretion and risk. Investing involves risk, including the possible loss of principal, and past performance is not indicative of future results. Information is provided "as is" without warranty of any kind.
