How to Calculate Your Life Expectancy

How would your retirement plans change if you knew you would live to 100? While no one has a crystal ball to see the future, there are tools available to help you make an educated guess regarding your life expectancy. And that knowledge could help you avoid running short of money in retirement.

“We are living longer, and that’s because of genetics and science,” says Avneet Kaur, chief financial officer and co-founder of wealth management firm Core Family Office in Los Angeles. She suggests that three-digit lifespans could soon become more common.

Certainly, the number of centenarians has been steadily increasing. The New England Centenarian Study out of Boston University calculates that 0.27% of the U.S. population was age 100 or older as of 2021, double the prevalence from 20 years earlier.

Even if you don’t expect to hit the 100-year mark, understanding longevity and calculating your life expectancy are important steps in preparing for a successful retirement.

Why Life Expectancy Matters

The most obvious reason to know your life expectancy is to more accurately estimate how much money to save for retirement. Funding a 10-year retirement looks much different than paying for 30 years out of the workforce.

There is an added layer of importance for couples who need to plan for not just one, but two lifespans. That means not only ensuring resources are available to cover the needs of each partner until death, but that each person understands how their household’s retirement plan works.

Women should be more in charge of their finances,” Kaur says. She has seen instances in which a woman will let her husband manage all the money, only to be left with debt and no assets once he dies. Knowing your life expectancy won’t be helpful if you’re blocked out of financial planning decisions.

How to Determine How Long You’ll Live

There is no way to be 100% certain about your life expectancy but you can make a good guess.

“One common way to estimate life expectancy is by using actuarial life tables,” says Andrew Latham, certified financial planner and managing editor of the financial comparison website Supermoney. These tables use statistical data to estimate mortality.

  • Social Security Life Expectancy Calculator: Based on Social Security actuarial tables, this simple calculator estimates your lifespan based on your current age. Simply enter your sex and birthdate to see the average additional lifespan you can expect based upon your current age and retirement milestone ages. This calculator does not take into consideration factors such as your health or lifestyle.
  • Actuaries Longevity Illustrator: Developed by the American Academy of Actuaries and Society of Actuaries, this tool is designed to provide longevity probabilities for individuals and couples. It asks for a person’s gender, date of birth, expected retirement age, smoker status and general health status. The calculator assumes you will make it to your expected retirement age and then provides the probability of living to ages through 100. You can print the results and take them to your financial planner.

“This really can be a wake-up call, in a positive way, for people to think about their retirement choices,” says Linda K. Stone, senior pension fellow with the American Academy of Actuaries.
If someone knows they have a 25% chance of reaching age 95 or a 15% probability of living to 100, they may rethink how they approach saving and spending decisions.

Mistakes to Avoid When Calculating Life Expectancy

Don’t make the retirement mistake of thinking that figures for average life expectancy will accurately reflect your individual lifespan.

“The most common mistake when calculating life expectancy is underestimating how long you will live,” Latham says. “Many people base their calculations on average life expectancies, but remember, these are just averages.”

Those averages may be skewed by irregular events, such as the COVID-19 pandemic. They also don’t take into account individual factors like health and family history.

In 2021, the average life expectancy at birth was 79.1 for women and 73.2 for men, according to the Centers for Disease Control and Prevention.

However, if a man is healthy enough to reach age 70 this year, the Social Security actuarial tables indicate he could live an average of 15.4 years more. That’s more than a decade longer than the CDC figure suggests.

For this reason, it’s crucial to estimate longevity based on your individual factors rather than relying on more general averages.

Managing Longevity Risk

A key part of retirement planning is managing longevity risk – that is, the risk that you will outlive your money. Doing so can involve more than simply putting extra cash into a retirement account.

“People need to reframe how they plan for retirement,” says Evan Potash, wealth management advisor with TIAA. “Rather than worrying about nest eggs, they need to ask: How should I plan for savings that will last the rest of my life?”

The answer, he says, is to look for sources of lifetime income. These provide a steady stream of cash regardless of how long you live. Social Security is one example and a primary source of income for many retirees.

Traditional pensions are also a source of guaranteed income in retirement, but relatively few workers qualify for these benefits nowadays. An alternative may be to purchase an annuity – some products promise not only lifetime benefits for you but the possibility of benefits for your heirs as well.

“You want to start by securing yourself and your beneficiaries,” Kaur says.

She suggests her clients begin with permanent life insurance or a product such as a fixed annuity to safeguard funds for the future. Unlike 401(k) plans and IRAs, these accounts are insulated from market downturns. “We want to keep you away from the market when it’s a foundational product,” she says.

Regardless of the specific financial products and accounts you use, it’s always best to plan for a longer life rather than a shorter one. Having money left when you die is preferable to running short and needing to make drastic lifestyle changes during your final years.

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