Life Expectancy Used to Plan Retirement

Life expectancy can be affected by everything from diet to geography, and typically changes throughout your life.

Making a financial plan image by Allen Stoner from

When you're planning for retirement, it's common to use average life expectancy figures to determine how long your money will need to last. While the average life expectancy in 2012 is around 78 years, this figure is just an average, so about half of the population will live longer. If you're lucky enough to live past this average age, basing your retirement needs on the average life span could leave you short on cash with many years of living left to go. Instead of looking to average life expectancy, calculate your own expected lifespan based on factors like health, genetics and lifestyle for more effective retirement planning.

Social Security Life Expectancy Estimates

The U.S. Social Security Administration, or SSA assumes, that a 65-year-old man will have an average life expectancy of 83, while a 65 year old women has an average life expectancy of 85. According to the SSA, 50 percent of the population will live longer, while 50 percent will die before these average age estimates. A full 25 percent of the population is expected to live to the age of 90, while 10 percent will live to the ripe old age of 95. Keep in mind that these figures change based on your age, so young people may have a longer life expectancy, while those older than 65 may not be expected to live as long. Life expectancy not only changes throughout your lifetime as you reach certain age milestones, but average life expectancy changes over times thanks to changes in healthcare, lifestyle and other factors.

Life Expectancy Calculator

While average life expectancy figures are useful for organizations like the SSA, they may be less useful for individual investors. A better way to plan for retirement is to calculate your own personal life expectancy using the SSA's online calculator, which can be found in the Resources section of this article. The calculator takes into account your own personal health, heritage and lifestyle to determine how long you can expect to live.

Planning Beyond Your Life Expectancy

Most retirement planning experts recommend that you plan for a longer-than-average retirement. For example, CBS News suggests that you calculate your life expectancy using an online calculator, then add five to 10 years just to be safe. U.S. News and World Report recommends adding five years to your life expectancy for retirement planning purposes. According to CNN, many financial planning sites automatically use life expectancy figures higher than those used by the SSA. Some steer investors to plan to live to the age of 92, 95 or even 100.

Personal Choices

Keep in mind that retirement planning involves making some personal choices based on your own feelings and values. When deciding how long you need to make your savings last, ask yourself whether you'd rather run out of money early and be dependent on your family, or have less to spend now but more to last you if you live longer than expected.

Guaranteed Income

Annuities serve as a balanced option for retirement planning. These funds provide a guaranteed payout every year for the rest of your life no matter how long you live. Consider investing at least part of your retirement savings in an annuity plan for added piece of mind in your golden years.