The clue many of us use to forecast our life expectancy is
family history. If you’re still healthy and your parents got past 85, it seems
reasonable to expect that you’ll reach that milestone too—barring an encounter
with a moving bus. About half of Americans consider family history first when
estimating their own life expectancy, says a survey by the Society of
Actuaries. Yet research shows that heredity plays a smaller role in how long
you live than most people think. Determining a life span is a complex and
inexact science. Understanding what contributes to your life expectancy could
help you plan for what lies ahead. But it may be only part of the equation in
addressing your future financial needs.
Genes not necessarily the key
Financial planners say that they talk with their clients
about family history when plotting a retirement time horizon. Yet
research hasn’t shown a huge correlation between genes and life span before age
60. A 2006 Scandinavian study of twins found that most identical pairs died a
decade or more apart, in spite of their shared genes. This and similar studies
asserted that as little as about a quarter of one’s longevity is connected to
inherited traits.
A 2013 study in the journal Experimental Gerontology did
show that when one parent lives to 100, his or her offspring show less risk of
developing certain age-related ailments compared with children of shorter-lived
parents. They’re also less likely to need drugs to treat medical problems than
other people. The paper confirmed that the genetic influence on aging was more
evident at advanced ages. But those without very old ancestors may not be able
to extrapolate from this about their own longevity.
Life expectancy and lifestyle
Your life expectancy, it turns out, has a lot to do with
lifestyle. A family history of heart
disease correlates with a higher risk of early mortality, but new
medications can lessen its likelihood. High blood pressure can be inherited,
but it can also be addressed with medications. Exercise and
a healthy
diet are also associated with longer lives. Thanks to the mathematics-based rules of
probability, we do know that couples are likely to live longer than those who
live alone.
Use caution with calculators
If you insist on a definitive age on which to hang your
plans, you could check out Northwestern Mutual Life Insurance Company's Lifespan
Calculator, which attempts to show how factors including lifestyle choices
can affect your expected age of death. But don't view the results as gospel.
The calculator asks about family cardiovascular history, for instance, but
notes that it may not provide accurate results for individuals who have a
chronic illness. Still, if you want to focus on a number from a life
expectancy calculator, add five to 10 years to any result you find.
Explore your options
Rather than focusing on how long you’re going to live,
consider financial solutions that work regardless of life span. Webb, the
economist, says he’s partial to annuities because they provide a steady stream
of income for life. Traditional pensions are annuities; so is Social Security.
Variable annuities have earned a bad reputation for their high up-front costs
and questionable returns. But immediate annuities—which pay out right away on
an up-front investment— and deferred annuities, particularly new “longevity
annuities,” might be appropriate for folks concerned about outliving their
funds.
Delay Social Security claims
There’s one element on which experts agree: Delaying Social
Security claims is a great hedge against outliving your money. Each year past your full
retirement age that you delay taking benefits you’ll increase your
eventual monthly benefit by a handsome 8 percent, with inflation adjustments. That
kind of guaranteed, risk-free rate of return isn’t currently available with
other investments. And those payments continue for your lifetime.
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