Very interesting article entitled "You'll Probably Live Longer Than You Think"
In a recent TIAA Institute study, 43% of women correctly estimated the life expectancy of 60-year-old women in the U.S. (The right answer was 85.) Only 32% of men chose the correct answer for the life expectancy for 60-year-old men, which was 82. Men also were far more likely than women to underestimate life expectancy — and that’s a huge potential problem for both sexes.
The thing about longevity is that it’s persistent. The longer you live, the longer you are likely to live. One out of three men and 1 in 2 women in their mid-50s will live to 90, according to the Society of Actuaries. There’s a 50% chance that at least one member of a heterosexual married couple age 65 will be alive at 92.
With longer lives comes “longevity risk”: the chance that people will outlive their savings. Understanding and addressing that risk is an important element of retirement planning, but most Americans are falling short, says Surya Kolluri, head of the TIAA Institute, which conducts research on financial security.
A 2022 paper for the National Bureau of Economic Research found that virtually all American workers ages 45 to 62 should delay their applications beyond age 65 to maximize their benefits, and that more than 90% should wait until age 70. But currently, only about 10% of applicants wait that long, the researchers found.
Here is a longevity calculator: https://calcuworld.com/health-calculators/life-expectancy-calculator/
More here: https://www.newretirement.com/retirement/longevity-trends-and-life-expectancy-calculators/
Global pandemics would like a word 🙂 "Hold my beer, longevity calculator, watch this!" I know, I know, there's always a bus lurking! Speaking of which, check a chart of historical fatal pedestrian accidents (hit by vehicle). Was on a very steep declining until...cell phones came about. Since that point, up through the roof. Careful out there!
This website provides a (sobering) visualization based on historical return cycles and inflation:
"Visualizing Early Retirement Success and Longevity Risk" (Subtitle: "Rich, Broke, or Dead?")
https://engaging-data.com/will-money-last-retire-early/
I think that it assumes a 4% withdrawal rate.
“Hope for the best, prepare for the worst.”
What I got out of the calculator (it appears to use historical averages - love it) is if you start out with, say, $2 million in retirement savings, starting at say, age 60 and live 35 more years (and don't live within a 50 mile radius of LA, San Francisco or New York City - cost of living), you should be good to go!
@pizzaman, I agree. Assuming a 4% ($80K/yr) withdrawal rate on the $2M with (for example) a 60/38/2 allocation looks quite safe to avoid going broke for a 35 year time horizon based on historical sequences.
It is the life expectancy along the way that is sobering:
Age %Dead
75 24%
80 41%
85 62%
90 82%
95 95%
Makes you want to get retirement in gear and enjoy it ASAP!
ASAP indeed 🍔 🍟 🍕 ☕ 🍵 🍶 🍾 🍷 🍸 🍹 🍺 🍻 🥂 just to name a few of the goods things retirement has to offer!
