What are you using for your longevity number?

[Dtail]

Yes, you need to use "something", but not just "anything"!

You realize those tables are based on averages, right? For critical things, it is not wise to plan on the average condition.

If you need to drive 100 miles with no gas stations in between, and your car averages 25 mpg on that trip, do you feel that 4 gallons from empty is good planning? Most would not. They'd plan on having worse than average mpg, and maybe needing to make a side trip, or having to double back for some reason after being 75 miles out.

Plan for a more extreme case. Stuff happens.

Example:

The IRS table gives a 20.4 year longevity for a 68 YO = 88.4 years.

This site ( https://www.longevityillustrator.org/ ), gives a 68 YO male, average health, a 14% odds of reaching 95, and 4% odds of reaching 100. A female has a 22% and 7% odds of 95 and 100 age.

For a couple, the odds are higher that one of them will exceed those odds (the 'tails' add up).

Plan for the worst (best?) case.


-ERD50

Agree, especially if potentially running out of money is on the table.

 

[eyenitnoy]

Yes, you need to use "something", but not just "anything"!

You realize those tables are based on averages, right? For critical things, it is not wise to plan on the average condition.

If you need to drive 100 miles with no gas stations in between, and your car averages 25 mpg on that trip, do you feel that 4 gallons from empty is good planning? Most would not. They'd plan on having worse than average mpg, and maybe needing to make a side trip, or having to double back for some reason after being 75 miles out.

Plan for a more extreme case. Stuff happens.

Example:

The IRS table gives a 20.4 year longevity for a 68 YO = 88.4 years.

This site ( https://www.longevityillustrator.org/ ), gives a 68 YO male, average health, a 14% odds of reaching 95, and 4% odds of reaching 100. A female has a 22% and 7% odds of 95 and 100 age.

For a couple, the odds are higher that one of them will exceed those odds (the 'tails' add up).

Plan for the worst (best?) case.


-ERD50

Hi ERD50:

Thank you for the reply. Yes, I do understand those are averages. And yes, if you use those averages you are accepting some longevity risk. Here is how I look at things.

Let's use your numbers. Let's say I am a 68 year old "winner" who hits on the 14% chance of living to 95. Let's also say that I followed the life tables and planned to kick the bucket at 82. (30 year draw, using standard models, starting at age 52.)

So, what happens with the 13 extra years? Am I broke? Nope.

1) First off, keep in mind when drawing from a nest egg, the draw calculator. My results (using 4% draw rate, you can of course choose a different rate.)

***
Here is how your portfolio would have fared in each of the 121 cycles. The lowest and highest portfolio balance at the end of your retirement was $-300,739 to $4,259,606, with an average at the end of $1,415,126. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

***

So, in 6 runs, I actually ran out of money before hitting 82, but on average there was 1.4 million dollars left over at the end!

Point being, there is a 95% chance I have enough money to make it to 82 but also a more likely than not chance there is additional money to spend for those extra years!

And this is good since, ideally, I die the day I spend my very last penny!


2) As I backstop, I plan to take social security at age 70. This is my extra insurance against running out of money. The extra benefits would be meaningless in the scenario where I have millions at the end of my life. But in those 6 scenarios where I run out of money early, the extra money from delaying social security is a lifesaver. (And I note, in NONE of the scenarios did I run out of money before age 70. Yes, there is a non-zero chance of that happening, but it is diminishingly small.)

(And, no taking the social security money early and investing it fails in this case because I am only using the money in situations where I run out-due to a horrible market-and had I invested the social security in this horrible market it also would have not performed well. Remember, when looking at the 121 lines from the calculator, you are going to live on one and only one of those lines!)

Bottom line: I am sticking with the social security life tables. I am comfortable with this risk.

I'd also say, for folks ultra-conservative, think about the consequences of being too conservative. Yes, it lowers your chance of running out of money. But it also decreases your spending and lifestyle for the *rest of your life.* That means few vacations, less fine wine and cutting out other such things. That too is a real cost!

Of course, everyone must make their own decision!

Thanks again for your feedback.

 

[W2R]

I regard my projected longevity as a dynamic number, not fixed. So, for example, if I find I have lived to within, say, 10 years of that number, I'll update my inputs and recompute what I can spend.

There are many expenses that I could easily eliminate without affecting my comfort and well-being much at all. So, at that point I'd do that. No way do I want to be living under a bridge and eating out of trash cans when I'm near the end of my life.

C'mon folks! This is not rocket science!

 

[skyking1]

Adjustments? Naw! No way

 

[Koolau]

2) As I backstop, I plan to take social security at age 70. This is my extra insurance against running out of money.

In my plan, I always keep this in mind. I started at 70. DW and I get a livable amount monthly just from SS and my (diminishing - aka uncola'd) pension. Worst case would probably make me move to a lower COL area. Not ideal, but for a backstop, it's a reasonable way to look at my plan. YMMV

 

[O2Bfree]

I'm adopted, and don't know how long my bio parents lived. I decided to use 99.

Recently took a DNA test and found out I'm 50% Finnish. Life expectancy for female Finns is around 84, so 99 seems reasonably safe money-wise.

 

[MarieIG]

I doubt if my "regrets" on my deathbed will include not having spent enough money.

Should I live a long life, I don't want to have to pinch pennies and reduce my standard of living towards the end. I actually want to be in the position to spend more money at that point - hire help, etc. - hence planning for a long life.

 

[ChiliPepr]

FWIW, a quick google search says current U.S. life expectancy is around 78.6 (76.1 for men and 81.1 for women).

That is the life expectancy for a newborn. Use this table to determine your life expectancy. EG:a 50 year old male can be expected to live to 79.8, while a 60 year old male can expect to live to 81.7 and a 70 year old male can expect to live to 84.6!

 

[KarenF]

My Mom smoked, and had cancer, and lived to 94. I am putting 105 in the calculators for me. I am turning 61 this week, and other than Hashimotos (well controlled) I am very healthy. My Mom also had thyroid issues, which was probably Hashimotos as well. My husband is adopted and has no family health history, but is healthy so we use 95 for him.

 

[LV_Travel]

Plan For Much Longer

IMHO-Few things to consider:

The rapid advances in medical research will prolong many peoples lives especially if you are in younger age brackets.

Average life span is not accurate for most people. Most will live longer or shorter lives than average. Need to consider your specific health history and habits.

Inflation is the biggest risk to buying power.

You don’t want to run out of money in your 90’s or 100’s.

If you have serious medical issues ignore the above and plan accordingly. But, if you are a healthy 40, 50 or 60 something the next couple decades are likely to result in significant increases in life expectancy.

 

[jldavid47]

You should never plan to the life expectancy in a table. That number is approximately where 50% will die younger and 50% will die older (50th percentile). It's better to plan for the 90th percentile at least. Personally I've been using age 97. It is likely I will die younger, but I'm not planning on it.

 

[dheb]

I use 102. My grandfather lived to 92, so I'm hoping to outlive him. If I stick to my budget, and we don't have worse economic conditions than we've ever seen, FIREcalc thinks that if I make it to 102, I should have as much then as when I started, and likely a lot more. (But I'll be too old to spend it on anything fun!)

 

[Dtail]

You should never plan to the life expectancy in a table. That number is approximately where 50% will die younger and 50% will die older (50th percentile). It's better to plan for the 90th percentile at least. Personally I've been using age 97. It is likely I will die younger, but I'm not planning on it.

Generally agree.

 

[Tracer]

Dad made it 98, so I just rounded it out to 100

 

[imnontrad]

I am not using ANY longevity number. Looking back through my family tree clear back to the 1600's, a LOT of my ancestors lived into their 80's and 90's. Both of my parents lived into their 80's and I am in much better physical shape than they were at my age.

The 4% rule is for a retirement of 30 years. But not only am I not drawing down my investments by 4%/year (and still spending what I want), but my net worth is actually increasing. So I am not worried about outliving my money.

 

[daylatedollarshort]

I'd also say, for folks ultra-conservative, think about the consequences of being too conservative. Yes, it lowers your chance of running out of money. But it also decreases your spending and lifestyle for the *rest of your life.* That means few vacations, less fine wine and cutting out other such things. That too is a real cost!

Of course, everyone must make their own decision!

If you look at happiness studies, most of the factors that really make people happy aren't consumer goods but are things that don't cost a lot, like social connections, getting out in nature, having leisure time, music, mindfulness, meditation and gratitude. In fact excess materialism is actually linked to depression: "We found that the more highly people endorsed materialistic values, the more they experienced unpleasant emotions, depression and anxiety, the more they reported physical health problems, such as stomachaches and headaches, and the less they experienced pleasant emotions and felt satisfied with their lives."- https://www.vox.com/2014/12/24/7447727/materialism-psychology

 

[Scuba]

DH and I both use 95, but as W2R said, we have the opportunity to make adjustments if need be. We own an investment property that isn’t counted in our income projections or our net worth, so that is our “longevity insurance.”

 

[Fermion]

I used 80. I might adjust it as things change in the medical field but since things are starting to creak at 51, I don't see much point in doing stuff past 80 so that is a good time to pick.

 

[skyking1]

If you look at happiness studies, most of the factors that really make people happy aren't consumer goods but are things that don't cost a lot, like social connections, getting out in nature, having leisure time, music, mindfulness, meditation and gratitude. In fact excess materialism is actually linked to depression: "We found that the more highly people endorsed materialistic values, the more they experienced unpleasant emotions, depression and anxiety, the more they reported physical health problems, such as stomachaches and headaches, and the less they experienced pleasant emotions and felt satisfied with their lives."- https://www.vox.com/2014/12/24/7447727/materialism-psychology

Agreed, it is more about having the time to spend as you wish, rather than things. Plan to have enough to be comfortable.

 

[Sue J]

Mom died at 83 and Dad made it to 90 but his last few years were the slow downhill glide. None of that looked like fun and he was clear that he was ready to go anytime.

At one point I thought that I'd like to die between 78 and 82 after a short illness. Have enough time to wrap things up and say my goodbyes but leave before I spent all the money on the very expensive last years.

Then I had grandchildren.......

 

[eyenitnoy]

If you look at happiness studies, most of the factors that really make people happy aren't consumer goods but are things that don't cost a lot, like social connections, getting out in nature, having leisure time, music, mindfulness, meditation and gratitude. In fact excess materialism is actually linked to depression: "We found that the more highly people endorsed materialistic values, the more they experienced unpleasant emotions, depression and anxiety, the more they reported physical health problems, such as stomachaches and headaches, and the less they experienced pleasant emotions and felt satisfied with their lives."- https://www.vox.com/2014/12/24/7447727/materialism-psychology

I agree with this. You are absolute right that money, in and of itself, does not equal happiness.

But I still think many people apply a much too strict restriction on spending due to overly conservative life projections. Just because someone in my family tree lived to 99 does not mean I will. The odds of this happening are low and that might be a good thing given the quality of life many people have who do make it to this age. I think there is a balance here. You want to spend *appropriately* given whatever your resources in retirement are. Underspending and overspending should be avoided. And spending money early in retirement, when you have more health and vigor, is a *good* thing.

If you starve yourself of spending, because of using life expectancy in the upper 90s or even up to 105, you will not spend "enough" thus probably leaving behind a fortune to heirs. While spending doesn't equal happiness, if you have always dreamed of that trip to the south pacific but deprive yourself of ever doing this just in case you live to 105, I think that is unfortunate. All that means is your kids, or grandkids or great-grandkids, will take your trip to the south pacific instead. Because, believe me, they will spend that "found money" if you don't.

The fear of running out of money is important. It protects from overspending. But like all things, there should be a balance. Even if, for example, you do live to 105, chances are those final years are going to be of less quality and that money might just get eaten up by some nursing home or huge end of life medical bills or something along those lines. Is *that* how you want to use the money you worked and saved a lifetime to accumulate?

If I do end up living to 105, and am in some nursing home bed with about two marbles still rolling around in my head, and I stick the government with huge end of life bills because I have no assets left, as far as I am concerned my plan worked just as intended.

Of course, that's just my perspective. I really want to spend down all my money before kicking the bucket. If anyone is going to blow my nest egg on travel, booze, and fun, it is going to be me. NOT MY HEIRS!

And yes, some folks want to leave money behind for heirs, so in that case the planning would be different. That's fine-it's their money. They can plan accordingly.

 

[SecondCor521]

If I do end up living to 105, and am in some nursing home bed with about two marbles still rolling around in my head, and I stick the government with huge end of life bills because I have no assets left, as far as I am concerned my plan worked just as intended.

Some older people may be concerned that in such a situation, the government may not pick up the tab and/or family members might feel burdened to do so. (It's not a concern of mine, but it seems reasonable.)

 

[F.I.R.E User]

125.

 

[eyenitnoy]

Some older people may be concerned that in such a situation, the government may not pick up the tab and/or family members might feel burdened to do so. (It's not a concern of mine, but it seems reasonable.)

It is probably worth pointing this out:

https://www.creditkarma.com/advice/i/medical-debt-after-death

***
You may be liable for a loved one’s debt if …

1) You co-signed for the debt, such as a loan.

2) You’re a joint account holder for a credit card. This would make you responsible for paying off any balance. If you’re simply an authorized user of the credit card, then you usually won’t have to pay for the credit card debt.

3) The deceased person was your spouse and you live in a community property state.

4) The deceased was your parent and state law requires you to pay a certain kind of debt, such as healthcare costs. States with filial responsibility laws are: Alaska, Arkansas, California, Connecticut, Delaware, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Mississippi, Montana, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, look up individual state statues for details.

And this is not as bad as it sounds in many cases:

Nevada Statute 428.070 requires filial support, but ONLY where the child has promised to do IN WRITING.

California Filial Support Law
In California, the filial support law provides that “every adult child who, HAVING THE ABILITITY so to do, fails to provide necessary food, clothing, shelter, or medical attendance for an indigent parent, is guilty of a misdemeanor.” California Family Code §§ 4400-4405.

If you live in a filial law state, look up the statute.

5) You were the executor, or other responsible representative, of an estate and you didn’t follow state probate laws as required.

***

***
What is an ‘insolvent estate’?
If the deceased person’s debts exceed the value of the assets in the estate, it’s considered an “insolvent estate.” Because there’s not enough money in the estate to pay the medical bills and other debts, those debts may go unpaid.
***


I'm not sure there is an afterlife, but if there is I will enter it with a smile if my uncle-Uncle Sam-is stuck with the bills. He can use the decades of my income tax payments to cover it!

 

[SecondCor521]

You might have missed my point. Sometimes family members will feel the obligation based on their morals, not on what the law says.