Here is a question most of us would rather skip: How long do you think you are going to live?
It is not a comfortable thing to consider. But retirement planners say it might be the most important number in your entire financial plan. And chances are, you are guessing too low.
The number you probably have in your head is wrong
Most of us know that average American life expectancy at birth is around 80 years. That is the figure that tends to stick. But it is not the right one to use when you are planning a retirement.
Life expectancy rises with age. If you are a man who has already reached 50, your life expectancy climbs to 82. For women at 50, it rises to 85. Those are the figures from the Social Security Administration.
And those are just averages. Retirement planners do not plan to the average. They plan to the possibility that you live well past it.
Your parents are not a reliable guide
Many of us mentally anchor to our parents or grandparents when we guess how long we might live. A parent who passed from a heart attack at 80, a grandparent who died of cancer at 70. Those numbers feel personal. They feel relevant.
But experts say they are probably not as predictive as we think.
Your parents and grandparents were more likely to smoke, which is a major longevity limiter. They also lived in an era when cancer, heart disease, and other serious illnesses were far more lethal than they are today. That means something that killed your parents or grandparents may be manageable now.
You may be healthier than you feel
Here is something else worth hearing. Many older Americans underestimate their own health.
If you are 60 and taking a couple of medications for blood pressure or cholesterol, you might feel like you are in rough shape. Roughly three-quarters of Americans over 60 have hypertension, according to federal data. Having it does not automatically mean you are less healthy than the average person your age.
A recent TIAA Institute survey tested Americans on basic longevity knowledge. The survey asked how long a 65-year-old woman is likely to live, offering three choices: to 82, to 87, or to 92. Only about one in three got it right. The correct answer was 87.
What longevity calculators can tell you?
If you want a clearer picture, a few free online tools can help.
The Social Security Administration offers a basic calculator; you enter your gender and birth date, and it estimates how long you are likely to live. Northwestern Mutual’s Lifespan Calculator goes deeper, factoring in family history, exercise, diet, stress, driving habits, and smoking.
The University of Connecticut offers a Healthy Life Expectancy Calculator that also considers education and income, then breaks your remaining years into estimated “healthy” and “unhealthy” time. That is a sobering way to look at it, but also a useful one.
Planning for two people is even more important
If you are part of a couple, the math gets even more consequential.
Planning matters because a retirement plan has to cover the partner who lives longest. According to the Center for Retirement Research, if you and your partner are both 65 today, there is an 8.7 percent chance that one of you will reach 100.
The bottom line is simple, even if the math is not. Your retirement savings need to last as long as you do, and that is probably longer than you think.
