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Life Expectancy (redo)
Old 01-05-2017, 08:49 PM   #1
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Life Expectancy (redo)

How much of a factor has life expectancy had on your FIRE decisions? Initially thought we had a pretty good plan. I'm RE and DW still has 5-6 yrs to get her yrs for SS in. Been thinking on this a lot lately and with a tougher than usual winter & past yr, the thought of 5-6 more rough winters isn't helping. Neither of our fam get much past 70 yo with many passing in their 60's. Both of us closing in on 50yo. Without SS, today if DW RE, we could go 30 yrs @ 3% wr which is more than what we are living off of now (with the exception that we get HC from her work). HC would probably make it a 4 % WR which would knock it down to 25 yrs. Still well past both our fam actual passing age. Additionally the possibility of our SS being taxed when/if we do make it to full retirement age makes one wonder it it's worth getting the full amount. In short, I'm questioning our initial plan!
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Old 01-05-2017, 09:46 PM   #2
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You pays your money and you takes your chances. Even if your life expectancy is extended (dad is still kicking at 77 with multiple heart attacks and obesity, grandmother made it to her 80s with more than one stroke), how many of those years will be good ones? I know well that once you are in your mid-70s what you can do is increasingly limited. Might one beat the odds? Sure. Do you feel lucky? I decided too go for the fat life experience pitch, right across the middle of the plate and offset the various risks with contingency plans.
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Old 01-05-2017, 10:00 PM   #3
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Your situation is a hard call, with short-lived family. Brewer has it right in that you have to balance any deire to keep working with the possibility chance you might live to an old age (thereby encountering financial difficulties later). Annuitization at older ages is one remedy worth considering.

My family history includes all grandparents on both sides lived into 80's. I am in exceptional health so delaying SS til 70, planning on living until 95 (delayed SS will not be taxed due to roth conversions until 70).

OTOH, I would recommend to an older sibling (who is still smoking ) to take SS at 62, even though it's not needed.
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Old 01-06-2017, 08:50 AM   #4
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This has now pretty much become the main question we ask ourselves as well. We feel good with the math on the nestegg/investment/withdrawal side but the other side of the equation, the period of time we have left, is a hard nut to crack.

We come from exceptionally shortlived families (my dad died at 49. DW mother at 60, father at 66. All cancers)

I turn 45 next year and DW will be 52. DW suffers from a degenerative disease and I'm a hard drinker and meat eater..

I had predicated all our plans on longevity calculators. They had me living to 83 and her to 88. That now seems pretty fanciful and makes my 38 year withdrawal plan seem absurdly conservative.

Been toying lately with reducing the numbers to a 25 year plan. If I retire at 45, that would take me out to 70 and her 77. It would also mean spending a buttload of money each year (we have no heirs) but there are worse problems in life I guess.
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Old 01-06-2017, 01:44 PM   #5
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My brother retired at 42 and had a nice life until he died at 69 (COPD). He had enough to go another 10 years. I am glad he retired early and enjoyed it.

I have been retired for 14 years, got through 2008 by not selling, and still going strong (with mild COPD and tachycardia). My planning number was 98 but lately I have been increasing transfers to kids/GCs, and charities.
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Old 01-06-2017, 04:55 PM   #6
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Life expectancy has played a big part in our planning. We are planning to live until 90, but we could last longer. DW had 3 grandparents and both parents that lived well into their 90's.

My grandfathers lived to mid 80's despite smoking, heavy drinking and working in coal mines. This was in the days before the type of medical care that we can get today. One grandmother lived to be 99.

So ya, we are planning for the long run...
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Old 01-06-2017, 05:11 PM   #7
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Glad I have a pension that is well funded. I plan on being shot and killed at the age of 95 by a 20-year-old jealous husband.

Seriously, both DW's and my relatives are all over the map so I don't really have a good handle on it. Mostly I just use the normal averages for our ages.
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Old 01-06-2017, 06:49 PM   #8
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Life expectancy is something nobody can predict despite numerous web sites assessments based on your info. My only brother had died at 18 of lymphoma while great grandfather lived to see his 96 birthday, one uncle died of 3rd heart attack in his late 50s (air force / civilian pilot) while another uncle is relatively OK at 89. Accidents happen too. My take on it is if you enjoy your work (both physically and mentally) then work as long as you can. Otherwise, if you reach FI, then enjoy your life as much as you can and as early as you can.
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Old 01-06-2017, 06:57 PM   #9
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I have it easy! My life expectancy is 200 years! I have to leave enough nest egg for my intellectually disabled son so he can live off of it which means we will only live off the inflation adjusted returns forever. I predict inflation adjusted returns that can sustain for perpetuity to be 2.5%. Please correct me if I am wrong.
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Old 01-07-2017, 03:27 AM   #10
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I have it easy! My life expectancy is 200 years! I have to leave enough nest egg for my intellectually disabled son so he can live off of it which means we will only live off the inflation adjusted returns forever. I predict inflation adjusted returns that can sustain for perpetuity to be 2.5%. Please correct me if I am wrong.
I've also planned on my money needing to last "forever" (although for different reasons). I have no ability to predict either the inflation rate or the rate of future returns - the best I can do is guess - so I settled for arbitrarily increasing the size of the nest egg beyond what calculators like FIRECalc and my spreadsheet said I needed and putting most of it in equities and real estate and assuming that the net returns would more or less increase with inflation over the longer term. Short of working forever, that seemed like the best plan.
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Old 01-07-2017, 05:38 AM   #11
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I read somewhere that life expectancy isnt that related to your family's history. Lifestyle choices are much more important as a predictor. But mostly it is random. Given that, I simply use the general actuary tables. I also am working on the plan that my money needs to last for a very long time. Of course, I also intend to leave a legacy. Real question is how big should it be?
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Old 01-07-2017, 06:07 AM   #12
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The life expectation evaluators tend to give me a result of 87-88. I use 93 for Firecalc.
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Old 01-07-2017, 08:28 AM   #13
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I've also planned on my money needing to last "forever" (although for different reasons). I have no ability to predict either the inflation rate or the rate of future returns - the best I can do is guess - so I settled for arbitrarily increasing the size of the nest egg beyond what calculators like FIRECalc and my spreadsheet said I needed and putting most of it in equities and real estate and assuming that the net returns would more or less increase with inflation over the longer term. Short of working forever, that seemed like the best plan.
I also have all my investments in equities and real estate. They should keep up with the inflation as long as we don't get in to 1931 style depression.
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Old 01-07-2017, 09:46 AM   #14
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The life expectation evaluators tend to give me a result of 87-88. I use 93 for Firecalc.
I took the median expectancy and added the range of +- 7 years to get to 20-80 confidence level. IOW there is a 20% chance of dying at 82 and an 80% chance of dying by 96. So I used 96 as the relatively sure age of not running out of money. Of course these numbers change every year as we advance in age.

Since then, by spending 6 months in Mexico, our spend has dropped to 1.77% of investable assets including substantial gifting and charitable giving. And with 12% performance in 2016, we have plenty of flexibility.
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Old 01-07-2017, 10:29 AM   #15
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Nothing is guaranteed but I do think one needs to be realistic and look at genetics for some indicators. My family history has both longevity and early deaths. But for me it's all academic -- I have a "quiet" form of leukemia, so although I have not needed treatment to date, that might change at some point in the future. Regardless of treatment, it's just not realistic to think I'll make it to 95.
So, while not the only factor, it definitely was one to take into account into my ER decision.
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