No one has a crystal ball. But financial planning would be a whole lot easier if you had a reasonable idea of how long you're likely to live. And if you're planning as a couple, it is especially helpful to know your longevity possibilities. It might be a lot longer than you think.
The United States now has 70,000 people over 100 -- twice as many as 20 years ago, according to U.S. Census Bureau data. By 2050, the number of Americans over 65 is projected to reach 84 million, almost double what it was in 2012, according to a report by Bank Investment Consultant. You could be one of them!
And that possibility should impact your financial planning. For example, you'll make different investment and withdrawal decisions if you plan to make your IRA last for another 35 years after retirement. But if you knew with certainty that your lifespan would be shorter than actuarial average projections, you might either quit work earlier or go on a spending spree. Why buy a lifetime annuity unless you're pretty sure you'll live longer than the typical age on which the insurance companies price their payouts?
It's tough to bet on your own longevity - but that's exactly what financial planning requires. So, here are two ways to get a more educated prediction than your hopeful guess.
Livingto100.com
At the website www.livingto100.com, you can enter your personal characteristics, including family history and your own health habits, to get a reasonable projection of your life expectancy. I have recommended it frequently in my columns and books. You answer 40 simple questions, and then with a click of your mouse the program makes a longevity projections.
Some of the inputs are simple facts. For example, they ask how old are your parents and siblings (or how old were they when they passed on). Did you ever smoke, and if you quit, at what age? But some will test your integrity. How frequently do you exercise, how often do you eat green vegetables and fruit, and how many glasses of water do you drink a day. Strangest: Do you floss your teeth every day? (Gum disease is a direct predictor of heart problems.)
Be honest in your responses. And remember, your lifespan isn't set in stone - until you actually die. This website also gives hints on expanding your longevity by changing your eating and exercise habits. You might be surprised at how the changes impact your projections.
www.LongevityIllustrator.org
This interactive and predictive tool at this new website, www.longevityillustrator.org, was created by the Society of Actuaries and the American Academy of Actuaries. Theirs is the science of predicting longevity. And this website is less fun, but more illustrative of the possibilities.
After you enter your first name and date of birth, you're only asked a few basic questions: "What is your current general state of health?" and "Do you smoke?"
Then you're asked to indicate an age for the projection to start. You can either pick your nearest birthday - or perhaps an age farther in the future, such as your proposed retirement age. A click of your mouse and you will see your personal probability of living to age 75, or 80, or even past age 100.
Interestingly, you can enter the same information for your partner - and see a projection of your joint life expectancies. You'll see how long you can expect to live as a couple, and how long a survivor is likely to live after the first spouse or partner passes on.
You can view the information as a chart or a table, and even print out the information to take to your financial planner. Surely, good planners will be using this new resource.
Is it gruesome to try to take this look into the future? I admit that I hesitated before clicking that mouse! But life is better planned using the most knowledge available. That's why you check the weather report to see if you should wear a jacket or take an umbrella. And that's why you buy life insurance and update your estate plan - just in case.
Certainly your loved ones who depend on you deserve the respect that financial planning brings, even if it still is just a (more) educated guess. And that's The Savage Truth.