Life Expectancy

Life expectancy has increased dramatically; a person born in 2010 can expect to live to age 79, 32 years longer than a person born in 1900. More importantly, there has been an increase in the life expectancy of a 65-year-old. In 1980, the average life expectancy for a 65-year-old male was 79.1 years. In 2010, this number increased to age 82.7. These extra three years has a great impact on retirement security. Say a person has annual expenses of $50,000 in retirement; expenses for 14 years total $700,000. If this 65-year-old lives 17 years (instead of 14), the three additional years adds another $150,000 (a 21% increase). Now factor in inflation. For someone living 14 years (65 to age 79), a 3% annual inflation rate means $854,000 will be needed; adding another three years (to age 82) increases the total needed expenses to $1,088,000 (27% higher).