It’s probably not what you think. It’s “average life expectancy.” In other words, how long you will live. Sounds relatively harmless, right?
The average life expectancy in the US is 79.8 years. Never mind that we’re #36 on the list of the world’s developed countries behind Israel, Greece, Iceland and others!
But that’s ok, because it’s one of the most misleading and financially dangerous statistics you’ll ever read. Why do I call it financially dangerous? Because if you’re wrong about how long you’re going to live, and you end up outliving your savings, what do you do then?
The misleading part is that 79.8 years is our average life expectancy from birth. What really matters is our life expectancy from our attained age. What does that mean?
Simple. It means how much longer can I expect to live based on my current age. The problem with the average from birth is it takes into account deaths at all ages, including early deaths.
Let’s look at it another way. If you’re 65 years old and married, there’s a 91% chance at least one of you will live to age 80. We’re already beyond the “average”!
There’s a 78% chance one of you will live to age 85 and a 57% chance one of you will live to age 90.
But it’s keep going…There’s a 31% chance you or your spouse will live to age 95, and finally, there’s an 11% chance one of you will live to age 100! My dad passed at age 97, and my mom is going to be 94 in March of 2015, and still living on her own!
Retirement for most of us doesn’t look like a 20 year proposition. It may have for our parents, but not for us. It’s more like a 30 or 40 year proposition! The big question is…do you have a retirement income plan that will last as long as you do?
 Transactions of Society of Actuaries 1995 – 1996 Reports, US Annuity Mortality Table