Life Expectancy How long will I live?
If I want to save enough for a comfortable retirement then I want to know for what period would I live in retirement. So what is my life expectancy or how long will I live? The life expectancy number is an estimate of my future lifespan. The estimate is only a ‘guess’ if it is not based on some credible assumptions.
The published ‘life expectancy’ for Australian women of my age is the average period from now until death if women like me continued to die at the same rates as previously. Thus my ‘life expectancy’ or estimated future lifespan depends on the assumptions about death rates in future years for baby boomer women.
According to the Australian community scales my life expectancy is about another twenty years.
The life expectancy number provides an estimate of the average future period of life. But the actual lifespans of women vary. Some of my school friends could die this year, others will reach 100 years easily.
The pattern of deaths is unlikely to be a flat number of deaths each year but maybe a few deaths in each of the next ten years then an increased number per year. Eventually the number of our group dying each year would reduce, the probability of dying would still be increasing but there would only be few of us left.
In summary life expectancies are only estimates of how much longer the group would live on average. The proportions dying before or after attaining their ‘life expectancy’ are not fixed. We cannot assume that exactly half of our group would attain the life expectancy and the other half would die earlier. Neither can we assume that we will surely die as soon as we have attained our life expectancy.
Life Expectancy in theory
Another way of looking at life expectancy is to consider a group of one thousand women who were all born in the same year. If I were to send a birthday card to each of them every year for the remainder of their lives how many birthday cards would need to send? Answer, the number of cards I would need to send would be 1000 times the life expectancy of these women at the time I offered to send the cards.
Now some of these women might die before they receive their first birthday card from me. Others will live to receive only two or three birthday cards. But some of these women could be around for another twenty or thirty years still expecting me to send them cards to cheer their extreme old age.
Thus the actuaries’ definition of ‘life expectancy’ is how many years in total would this group of women live divided by the number of women in the group at the start. That is, ‘life expectancy’ at age 70 years is the mean number of future years that a women attaining 70 years of age now could expect to live.
Australian Life Expectancy
Every five years, the Australian Government Actuary calculates and publishes the Life Expectancy figures for males and females at each age based on the latest census data and deaths registered in Australia. The census data includes everyone in Australia so the published Life Expectancy tables are for the Australian population as a whole.
But how long will I live?
Life Expectancy numbers are produced for various subgroups of the population.
For example medical researchers might work on extending the life expectancy of people with particular medical conditions, such as lung cancer.
Life Expectancy for someone with Alzheimer’s disease could be between eight years and twenty years from the onset of the disease.
People who are currently healthy could expect to live a little longer on average than their less healthy friends. People who are willing to buy a lifetime annuity from a life insurance company generally believe that they are going to live much longer than the average guy. But there are no guarantees.
Why would I care about my life expectancy number?
If my life expectancy is an estimate of my future lifespan then maybe I need to think about stretching my money to cover that period. For people in good health, the life expectancy number could be less than their real future lifespan.
Therefore if you are currently in good health, then you could need to be planning for an active retirement period similar to your life expectancy followed by a period of quieter living. The Age Pension could be adequate to cover basic living costs for quieter living. But if you want an active retirement or a more comfortable quieter period, then maybe you would need additional financial resources.
Hint If you are still healthy enough to be working then maybe deferring ‘retirement’ could help your long term financial position. Working part time on a regular basis or short bursts of full time work could allow for some seniors travel in your active years without stringent restraints on your final retirement lifestyle.
Your financial plans for retirement could allow for many years of active retirement before you are limited to a quieter lifestyle.
If you would like further confidential, independent and professional advice about Centrelink, lifestyle or financial issues please contact Christine Hopper (03) 9808 0338.
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Disclaimer: The information contained in this website is of a general nature only and does not constitute “financial advice”. You should obtain your own personal financial advice before investing any money or moving in to any retirement village, lifestyle community or aged care facility. Financial Care Services is licensed to provide financial advice to individual clients based on their personal situations. © 2012 Financial Care Services Pty Ltd. All rights reserved.
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