Longevity tables in the past have been viewed and applied statically. But people age year by year so tables need a dynamic application ... example? You never reach your expected longevity age for your current age ... it is always older than you now are no matter how old you are.

1. Figuring How Long You’ll Live
Submitted by Larry Frank Sr. on Fri, 06/13/2014 - 12:00pm
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.
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; find one calculator with
good insights into these factors on the UPenn Wharton website and find
others by Googling “life expectancy calculator.”)
Two well-known tables for life expectancy are the Social Security general
population table and the 2000 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 tables to get a general sense of longevity. This
chart, from the 2007 version of the Social Security table, gives you a point
of reference when thinking about how much longer your money needs to
last.

2. The figures above show the number of years and expected age for a
female at both expected age (50% outlive that age) and a healthier
female (30% outlive that age). At 65, if you’re a woman you can expect
to live to age 86, depending on your lifestyle and health.
Yet at 85 you may have seven or more years remaining – illustrating the
importance of understanding given or present age when you plan
retirement spending.
The chart above compares the Annuity table to the Social Security
table. Notice that the “healthier” population subset enjoys a greater
number of remaining expected years compared with Social Security’s
general population. Also notice that the corresponding percentage of the
Social Security subset that outlives the stated number of years is less
than the expected longevity of the healthier population.
In other words, about 40% of the general population may outlive
members of the ”healthier” population due to lifestyle choices, lack of
accidents and other similar factors (including just plain luck).
Some advisors suggest planning to age 95. I suggested that, too, until I
looked at these kinds of tables during annual client reviews. Such advice
can reduce how much you spend today just in case you live to 95.
I now 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.

3. Follow AdviceIQ on Twitter at @adviceiq.
Larry R. Frank Sr., CFP, is a Registered Investment Adviser (California)
in Roseville, Calif. He is the author of the book, Wealth Odyssey. He has
an MBA with a finance concentration and B.S. cum laude in physics with
which he views the world of money dynamically. He has peer-reviewed
research published in the Journal of Financial Planning.n
http://blog.betterfinancialeducation.com/.
AdviceIQ delivers quality personal finance articles by both financial
advisors and AdviceIQ editors. It ranks advisors in your area by
specialty, including small businesses, doctors and clients of modest
means, for example. Those with the biggest number of clients in a given
specialty rank the highest. AdviceIQ also vets ranked advisors so only
those with pristine regulatory histories can participate. AdviceIQ was
launched Jan. 9, 2012, by veteran Wall Street executives, editors and
technologists. Right now, investors may see many advisor rankings,
although in some areas only a few are ranked. Check back often as
thousands of advisors are undergoing AdviceIQ screening. New advisors
appear in rankings daily.
Topic:
Social Security
Retirement Planning
Spending