Accurate life expectancy data is making financial planning more effective, allowing for a truer estimate of how much clients must save for retirement.
Life expectancy at birth has increased over the decades, and in 2011, centenarians were the second-fastest growing age group, reports Statistics Canada. We’re obviously living longer, right?
Not so fast.
In the U.S., a recently released lifespan study by the Society of Actuaries reveals life expectancy for 65-year-olds is six months shorter than reported in last year’s study, reports Bloomberg. In the study, baby boomers, gen-Xers and millennials all have shorter life expectancies.
Part of the problem, Bloomberg reports, is midlife increases in drug overdoses, suicides, alcohol poisonings and liver disease among white non-Hispanics, as revealed in a Princeton University study.
But don’t let clients ease up on the savings just yet.
Although the Princeton study is disconcerting, the director of research at the Society of Actuaries tells Bloomberg that year-over-year changes in mortality are volatile. A bad flu season can increase mortality in a particular year, for instance.
StatsCan says that, although Canadians have a life expectancy of about 82 years (with variation between sexes and across regions), declining functional health is a concern after age 65, with severe disability occurring on average at about age 77.
A more meaningful measure may be health-adjusted life expectancy — the number of years people can expect to live in full health. The latest estimate is 69 years for men and 71 for women, reports StatsCan. That means Canadians can expect to live more than 10 years with some level of disability.
For clients, that could mean a decade with less travel expenses but greater healthcare costs.
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