Life expectancy is a single number, and its usefulness is limited. It is the number of years that people your age and gender might expect to live on average. Although a few people will live to their exact life expectancy, most people will live either a shorter or longer period of time, and it could be much shorter or longer. There is a significant financial risk involved in living longer, especially if your primary source of retirement income is your savings. Therefore, it is very risky to rely on the life expectancy number when planning your retirement.
The Actuaries Longevity Illustrator estimates the chances that you will live for various lengths of time. And for couples, it also shows the likelihood that one of you will outlive the other. All of this information is important when planning a secure retirement.
The Actuaries Longevity Illustrator tool will help you understand the possibilities for how long you might live. If you plan for living only as long as your life expectancy, you may outlive your financial resources because there is a significant chance that you will live longer than that. If you plan for living to age 110, you may find yourself without adequate income during retirement.
This tool is intended to help you understand your longevity risk as you consider your options for a secure retirement. This tool does not consider financial aspects of your retirement planning.
While the ALI provides a reasonable approximation, you or your spouse/partner’s actual lifetime can differ significantly from these estimates, either above or below. The ALI is not designed to address your finances; this includes your investments, your earning potential, and your anticipated expenses.
In addition to those considered in the Actuaries Longevity Illustrator (ALI), longevity depends on many factors. These include: availability and access to health care, current medical conditions, exposure to environmental toxins, family history, geography, income, lifestyle and occupation. While these all affect longevity, many of them are reflected in your health status. The four factors chosen for the ALI (age, gender, smoking and health) have been shown to account for a significant amount of the individual variations in longevity. While these four pieces of information have been shown to produce reasonable approximations of an individual’s longevity, you or your spouse/partner’s actual lifetime can differ significantly from these estimates, either above or below.
American Academy of Actuaries and Society of Actuaries, Actuaries Longevity Illustrator, www.longevityillustrator.org/, (accessed Month DD, YYYY).