Financial planning would be a lot easier if we knew exactly how long each of us was going to live. Then you theoretically could spend your last dime on the day that you die, as the old adage goes. As it is, we are left to try to make certain plans around uncertain events.
JP Morgan created a retirement guide that shows your life expectancy probability at age 65. This may provide a little guidance as you plan for the future. No one knows for sure how much time they have to live, and there are a multitude of factors that contribute to your longevity, such as health habits and family history.
More than anything, these life expectancy statistics may help you from falling into the trap of thinking you will die early, when in fact you may have many wonderful years ahead of you. For example a 65-year-old woman has a 33 percent chance that she will live to the age of 90. Those are pretty good odds. Sorry men, your prognosis isn’t quite as good, but a 65-year-old man still has a 21 percent chance of living to the age of 90. A couple, where both are 65 years old, has a whopping 73 percent chance that one of them will live to the age of 90.
This increased longevity in large part is due to better health habits and improved health care, among other factors. These statistics are very generic, but they may cause you to rethink your retirement plan. It is better to plan to live a long life and save too much money, rather than spending all of your money and living too long. Statistics show that more people are afraid of running out of money than dying.
Of course there is always a balancing act between living the lifestyle you want in retirement and making your money last for your full retirement—counsel with a competent retirement planner to make sure that you are either saving enough for retirement or that your spending plan won’t leave your financial well dry.
You may or may not want to know how long you may live, but it is always a good practice to plan for best and worst case possibilities.