The average life expectancy for a 55 year old male is 24.3 years. For a 55 year old female it’s 27.8 years.
But who’s to say you are average?
Advanced life expectancy calculators ask questions about your lifestyle, education, career, stress factors, family history and more to calculate your own personal life expectancy.
Once you’ve calculated your life expectancy, use the suggestions below to adjust your retirement planning decisions appropriately.
Above Average Life Expectancy
If you tell me your goal is to set the world record for oldest person living, then I’ll tell you to save, save, save, delay retirement as long as possible, and carefully control your spending habits once you retire.
Seriously, having an above average life expectancy means you want to consider the following:
- Delay taking social security.
- Look into investment like annuities, products that will guarantee you an income for as long as you live, at least to cover fixed expenses.
- Make sure you are adequately protected against inflation with an appropriate allocation to growth investments(stock index funds) and TIPS(treasury inflation protected securities).
- Look into adequate long term care coverage.
- Work as long as possible.
Below Average Life Expectancy
On the other hand, if health conditions and family history tell us the odds are you won’t make it past 75, then plan for an early retirement, and a gradual spending of your principal.
- Having a below average life expectancy means you may make the following decision:
- Take social security as soon as you’re eligible.
- Build your investment portfolio to maximize current investment income, with less concern about hedging for inflation.
- Secure excellent medical coverage that will provide for any conditions that typically run in your family.
- Plan for an early retirement.
Joint Life Expectancy
For couples, if you’re both age 55 today, statistics say there is a 65% chance one of you will make it to age 85, and a 15% chance that one of you will celebrate your 95th birthday.
After you each develop your personal life expectancy profile, compare notes. If the odds say one of you is likely to go much sooner than the other, plan accordingly by using the following guidelines:
- Purchase adequate life insurance
- Choose pension benefits or annuity benefits that will provide sufficient income for the spouse with the longer life expectancy.
- Buy long term care coverage that provides benefits that can be shared between the two of you. This will be much less expensive than a separate policy for each of you.
- Make sure accounts are titled appropriately, and beneficiaries are properly named so the surviving spouse can easily take over management of financial items.
- If you are the spouse with the shorter life expectancy, and the one who handles finances, start sharing responsibilities now, or put plans in place for the appropriate person to take over when you’re gone.
