Life expectancy and investing

Investment Analysis Clubs Macro Economic Trends and Risks
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I would be absolutely delighted if someone would tell me when I would die.

I’m age 68 and was first diagnosed with bilateral breast cancer at age 60. After treatment, I’m fit enough to do Zumba every day. I could have a recurrence and die next year or I could live to age 90 (as my mother’s older sister did – Mom died of cancer at age 72). The statistics for my specific type of breast cancer shows a continuous die-off (straight line decline of survivors) over decades. Survival at Year 20 was 10%.

DH is a long-time smoker with COPD and emphysema. He is 69. His father died of COPD at age 65.

Most analysts recommend delaying Social Security until age 70 if possible due to the significant increase in benefit.
https://www.ssa.gov/benefits/retirement/planner/applying2.ht…

We decided to take Social Security beginning at age 62 since our breakeven age was 78 and it’s quite possible that neither of us will make it.

Another issue is investing. METARs know that the economy and the stock market have had many ups and downs over the decades. Intercst made the insightful comment that he can’t guarantee that a stock portfolio will be double today’s value in 10 years but he can guarantee that it will quadruple in 30 years. Given the level of today’s stock bubble, it’s not possible to guarantee that the value of a stock portfolio will be even half of what it is today in 10 years. But it’s certainly sage advice for a young person who can expect to live another 30 years.

https://www.multpl.com/shiller-pe

So how long can older people expect to live? The IRS has actuarial tables, but I prefer the data from Medicare which has the medical records of millions of Medicare recipients. They included respondents aged =65 years (n = 164,597).

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7452000/

**Life expectancy and active life expectancy by marital status among older U.S. adults: Results from the U.S. Medicare Health Outcome Survey**

**This study estimated total life expectancy (TLE) and active life expectancy (ALE) for respondents by their baseline marital status using a large longitudinal sample of the U.S. community-dwelling elderly population.** [Note that the study counted community-dwelling people and does not include people already in nursing homes, who are much sicker and frailer.]

**Between 65 and 85 years, married men and women had a longer TLE and ALE than unmarried men and women. For example, at 65 years, TLE for married men was 18.6 years, 2.2 years longer than unmarried men, and ALE for married men was 12.3 years, 2.4 years longer than unmarried men. Similarly, at 65 years, TLE for married women was 21.1 years, 1.5 years longer than unmarried women, and ALE for married women was 13.0 years, 2.0 years longer than unmarried women. Such marriage protection effects decreased with age.** [end quote]

First, community-dwelling people (on average) can expect to live from 16 - 21 years after age 65. Second, “active” life expectancy is significantly shorter than Total Life Expectancy.


          Life Expectancy          Active Life Expectancy
          Married     Single         Married    Single 
Men        18.6        16.4           12.3        9.9
Women      21.1        19.6           13.0       11.0

The risk is that an investor will run out of money before they run out of life. A secondary risk is that the investor will live an unnecessarily stringent LBYM lifestyle and die with a large remaining portfolio when they don’t intend to benefit heirs.

Every METAR should think carefully about their personal risk tolerance, both numerical and emotional.

This would all be so much simpler if we knew exactly when we would die.

Wendy

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“I would be absolutely delighted if someone would tell me when I would die”

Well, unless it’s tomorrow…
:grin:

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This would all be so much simpler if we knew exactly when we would die.

No need for life (death) insurance…

at 65 years, TLE for married men was 18.6 years, 2.2 years longer than unmarried men, and ALE for married men was 12.3 years, 2.4 years longer than unmarried men. Similarly, at 65 years, TLE for married women was 21.1 years, 1.5 years longer than unmarried women, and ALE for married women was 13.0 years, 2.0 years longer than unmarried women.

Any stats on polygamous marriage and lifetime outcomes? If one spouse is good, maybe two or more is better (for everyone)?

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If one spouse is good, maybe two or more is better (for everyone)?

I’m not sure how everyone gets more than one spouse. Group marriages?

DB2

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Kitces has a very informative article on this topic for couples. The trade-off basically goes like this: There is a benefit to both couples delaying to 70, but only if both couples live to the break even point.

Here is one of the key points:

As shown below, the odds (based on the Social Security 2010 period life table) that both members remain alive for their 80th birthday is less than 50%, but the odds are more than 50% that at least one of them will remain alive until age 90.

https://www.kitces.com/blog/why-it-rarely-pays-for-both-spou…

So in the case of spouses with unequal SS benefits, it may make the most sense for the spouse with the lower benefit to claim at 62, and the spouse with the higher benefit to claim at 70.

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That was the path we took after I also confirmed with Vanguard that there was roughly a 72% chance that one of the two of us would live past my breakeven point. I have not found any inflation adjusted annuity that provides full spousal survivor’s benefits at no additional cost.

Kitces has a lot of good arithmetic based analyses that helped me with my retirement planning.

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I’m not sure how everyone gets more than one spouse. Group marriages?

Marriage is a contract, nothing more, nothing less. Up to the religion, IMO–if the people follow one. Govt has little say–because to do so would violate the First Amendment.

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WendyBG writes

So how long can older people expect to live? The IRS has actuarial tables, but I prefer the data from Medicare which has the medical records of millions of Medicare recipients. They included respondents aged =65 years (n = 164,597).

Don’t forget that the people in the Top 25% of the US income/wealth pyramid tend to live a lot longer than average due to better medical care and fewer unhealthy habits. So the Medicare mortality tables likely understate the longevity for most of the folks posting here on METAR (like by 4 or 5 years for men, and a considerably wider gap for wealthy women.)

https://www.vox.com/science-and-health/2018/1/9/16860994/lif…

Of course, if you have a diagnosable medical condition with a likely shorter life expectancy than average, you should use that number for retirement planning. But even that poses risks with the general improvements in health care available to those on the higher steps of the US economic pyramid.

I’m probably a case in point. At age 44 after I’d been retired for 5 or 6 years I got diagnosed with lupus nephritis, a deadly autoimmune disease where my immune system was trying to destroy my kidneys. I felt fine, got plenty of exercise, and had no symptoms of illness. It was just something they picked up in a routine urinalysis during my annual check up. After a bundle of blood tests and a kidney biopsy to confirm their suspicions, the doctors informed me that the likely course of the disease was dialysis within 2-3 years, dead within ten. So why am a motoring along at age 66 with the kidney function of a teenager? (e.g., eGFR = 91)? I recounted the story last year on the Retirement Investing board.

https://discussion.fool.com/aj485-analyzes-for-a-guy-who-rails-o…

If you’re just blindly using the average Social Security mortality tables to inform your retirement planning, you’ll likely be far off the mark.

intercst

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Marriage is a contract, nothing more, nothing less. Up to the religion, IMO–if the people follow one. Govt has little say–because to do so would violate the First Amendment.

Every state I’ve lived in has had a law against bigamy, either as a felony or misdemeanor.

DB2

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Every state I’ve lived in has had a law against bigamy, either as a felony or misdemeanor.

Violating the First Amendment is nothing new–for any govt, at any level.

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I would be absolutely delighted if someone would tell me when I would die.

Maybe the human psyche couldn’t handle it.

Maybe fuzzy is actually easier to cope with … for a start it is much easier to put the subject out of your mind and carry on with life for now …

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Intercst made the insightful comment that he can’t guarantee that a stock portfolio will be double today’s value in 10 years but he can guarantee that it will quadruple in 30 years.

I saw the comment, but I can’t find it right now. But I am pretty sure he didn’t say “guarantee”, or he didn’t mean that if he said it, the correct statement is that the likelihood is very high that the money will at least quadruple (and probably even more than that) over a 30-year period. The actual results over all the 30-year periods through the last ~115 years show that to be true (which doesn’t mean that the 30-year period beginning now will have the same results, of course).

This would all be so much simpler if we knew exactly when we would die.

Intercst also commented about this in a different thread recently, and indicated that he prefers euthanasia over a long-term stay in a substandard nursing home. Again, that is my rough recollection, I can’t find the exact post.