Getting Up There

Jonathan Clements

LIFE EXPECTANCY HAS increased sharply over the past century—if you consider life expectancy as of birth. But if you look at life expectancy as of age 65, which is what matters for retirees, the improvement for the broad U.S. population hasn’t been nearly so impressive, as I discussed recently.

But it’s a different story if you look at more affluent Americans, notes one of my e-mail correspondents, Bob Frey, a financial planner in Bozeman, Mont. He sent along a spreadsheet put together by actuary and financial planner Joe Tomlinson. The spreadsheet details life expectancies as of age 65, but uses data for the wealthy, healthy portion of the population that is likely to purchase income annuities from insurance companies.

The table shows that, as of 2015, the life expectancy for a 65-year-old male is age 88 and for a female it’s age 90. But the real eye-opener is the figure for couples. If both husband and wife are currently age 65, there’s a 50% chance that at least one spouse will live until age 94—and a 25% chance that one spouse will still be alive at age 98.

“While life expectancy increases for the general U.S. population may have slowed a bit, the life expectancies of healthy, well-educated folks have continued to increase at a fairly rapid rate,” Frey writes.

There are two key implications. First, given those life expectancies, it isn’t surprising that income annuities aren’t as generous as many potential buyers would like—but the numbers also suggest that buying more lifetime income could be a smart move for healthy individuals. Second, and most important, the case for delaying Social Security benefits, so you get a larger monthly check, is even stronger than many folks imagine.

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