Wade Pfau, Ph.D., CFA, RICP®

How Long Can Retirees Expect To Live Once They Hit 65?

To better understand the extent of longevity risk, it is worthwhile to consider a few points in great detail.  Exhibit 1 provides period life table historical data from the Center for Disease Control to show remaining life expectancies for males and females at different points in history.

Between 1950 and 2010, the additional remaining years expected after age sixty-five increase by 4.9 years for males and 5.3 years for females. Much of these gains took place more recently. Over the course of twenty years—from 1990 to 2010—males reaching sixty-five added 2.6 more years, while females could expect 1.4 more years.

Though demographers debate extensively whether humans have reached the peak of our potential longevity, or whether we are on the verge of seeing someone make it to 150, it is reasonable for planning purposes to at least expect such longevity trends to continue. If longevity improves by about one year per decade, today’s thirty-five-year olds could expect to live three years longer than today’s sixty-five-year olds.

Exhibit 1: Historical Data for Remaining Life Expectancy at Age 65


Source: Center for Disease Control

Continuing with the theme of longevity being conditional on age, the next exhibit shows how median remaining longevity evolves with age. For each additional year of life, remaining longevity reduces by a fraction of a year. For a male at sixty-five, median remaining longevity is about twenty-four years, but at age eighty-nine, longevity has not fallen to zero. It is still about five years.

Exhibit 2: Remaining Longevity (Median) By Age


Source: Own calculations using Society of Actuaries Mortality Tables

The next exhibit makes a similar point, with results expressed as the median age of death by age, rather than median remaining life expectancy. Longevity continues to increase as one survives into advanced ages.

Exhibit 3: Median Age of Death By Age


The next exhibit uses survival data to calculate the distribution for the actual age of death for sixty-five-year olds. This is the probability that each age will serve as your last. The figure helps highlight the uncertainties around longevity risk.

For instance, 10% of males will have died by 74.3, the median age is 88.9, and 10% are still alive by 98.4. The corresponding numbers for females are 75.8, 90.5, and 100.1 These wide ranges can make planning difficult.

Exhibit 4: Distribution for Age of Death for 65-Year Olds


The final exhibit shows the gender make-up for survivors overtime for a sixty-five-year-old couple in which one or both members of the couple remain alive. At earlier ages, there is still a high probability that both are alive.

Death tends to impact males sooner because of their shorter life expectancies. Widows become increasingly common for couples, which explains the proportion of females exceeding males. By age 100, there are very few remaining couples in which both members will still be alive.

Female survivors represent about 60% of the remaining survivors within these households, while male widowers are more than 35% of the survivors.

Exhibit 5: Distribution of Household Make-up by Age for 65-Year-Old Couples


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