For the first time in American history, we are being told by the U.S. Centers for Disease Control and Prevention (CDC) that life expectancy has decreased in recent years. This is contradictory to what we all experience day-to-day, and perhaps no better evidence is available than right here in Florida. Surrounded by healthy, intelligent, and involved 70-somethings and beyond, statistics telling us that people are dying younger require examination.
Life expectancy is a largely misunderstood concept and must be considered on a case-by-case basis in order to be useful in responsible financial planning. Over many decades, Americans’ life expectancies rose steadily, fueled by advances in medical science, nutrition, and overall lifestyle, including safer work environments. Assigned at birth, life expectancy is applied based on actual experience of people, both alive and deceased. The concept is a forecasted average, a statistic that, like all statistics, must be clearly understood.
According to CDC, about a decade ago, Americans’ life expectancies stagnated, and then began to fall. The implication is that newborn babies will not live as long as their 10 and 20-year-old counterparts. This is true only in the statistical sense. In actuality, people who survive their mathematical danger points will live longer than ever. Life insurance statistics show that potentially lethal events include learning to drive, entering military service, and illegal drug use, rampant in inner cities and on college campuses.
Later on in life, diseases come into play, with heart attacks, various cancers, and a recent pandemic, taking many lives. While these perils claim Americans of all ages, modern medicine and healthy lifestyles lessen their lethality. Survivors now join healthy Americans with lengthened life expectancies. Regardless of statistics, planning for a long life is critical.
Americans fear two concepts more than they fear death itself. Public speaking is one, and we can’t do much to help people with that. The Big One, though, is running out of money. Enter financial planning. We can and do help with that.
Early deaths, those that distort the life expectancy tables, must be statistically ignored when planning for a long retirement. Thirty years is now commonplace, and more is possible. In our Retirement Planning, we generally consider the target to be at least age 100, with a goal of being financially stable throughout the entire period. Planning for less may result in disastrous financial outcomes. Live long and prosper. Despite early dangers, Americans have a great opportunity to enjoy life.
Van Wie Financial is fee-only. For a reason.
