Life Expectancy ~ A Funny (?) Story
Many years ago, I met with a couple in their early 70's. I had completed retirement income illustrations for them and had calculated the figures out to their age 90. They scoffed at this date, suggesting that they weren't likely to make it that long. Fair enough, but let's leave it long term just in case, I said. I then asked them what they were planning to do with the rest of their day? "Oh, go visit my parents"...?! True Story.
In retirement planning, life expectancy plays as important a role as; risk exposure, when to begin taking CPP, and your sustainable withdrawal rate. The decision for when to start receiving payments from the Canadian Pension Plan is quite interesting, as it is a guaranteed source of income for as long as you live. The average Canadian male is expected to live until age 80, with the average Canadian female outliving them by four years to an age of 84 (Statista, 2018). The temptation is strong to take CPP at age 60, but if we leap ahead to age 85, when many are still around, if other investment assets have been depleted, having a more significant guaranteed income would be welcome.
While there are numerous factors to consider in financial planning, having both a statistical average for life expectancy as well as an individual estimate of your life expectancy are key factors when conducting retirement projections. There are many life expectancy calculators available to help you determine an estimate of your life expectancy. Nothing is guaranteed in this life, but as I always say, you have to start somewhere.
You can try out one of these calculators with the help of "Project Big Life" and their Life Expectancy Calculator to help you plan for your retirement with your financial advisor.