One of the many imponderables involved in planning one’s retirement finances is the time horizon – financial advisor-speak for the length of time remaining before you die. You need to at least make a guess at this to properly plan your retirement finances. Not an easy topic, but as is so often the case anymore, our government is there to help (with the planning part, not the dying . . . yet.)
Go to www.ssa.gov/OACT/STATS/table4c6.html to see a table showing your life expectancy at any age. It says the average newborn male today will live to 74. The average 65 year old male has another 16 years left. Both of these time horizons strike me as way too short. And, outliving your money is one of the greatest risks faced by retirees.
So, you really need a better estimate, one that reflects your particular lifestyle, habits, etc. That’s just what you will find at www.livingto100.com. This site provides lots of advice for extending your life expectancy (a good thing in most non-financial respects), but the primary feature is an extensive questionnaire you can fill out (free, online), after which it will tell you your life expectancy. Cool!
One thing it will ask you, of course is your current age. For those of you who, after years of lying about it, aren’t really sure anymore just what your age actually is, I am providing herewith a simple yet remarkably accurate age calculator. Try it, and let me know how it worked for you.
1. How many times a week do you think about your age or aging (any number 1 through 9)?
2. I don’t believe you. Double it.
3. I still don’t believe you. Add 5.
4. Thinking ahead . . ., multiply it by 50.
5. If you have already had your birthday this year, add 1757. If not, add 1756.
6. Subtract the year you were born.
That leaves a three-digit number. The first digit is how many times weekly you claimed you think about your age. Silly you, huh!?
The remaining two numbers are your age.
Really.
Larry Halverson: I've Been Thinking
Larry Halverson, CFA, Managing Director of MEMBERS Capital Advisors, Inc., is a veteran of more than 35 years in the financial services industry. Links: SUBSCRIBE TO: I've Been Thinking | 
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2 comments:
Hmmm...fascinating...always wondered what the underlying algorithm is for equations like this...can you enlighten us? Always remembers me of one from the 80's where you had a bunch of numbers about the middle east conflict...and then turned the calculator upside down to see who one: Mobile Oil as I recall!
One serious question: how do you propose calculating life expectancy when living with a potentially terminal illness (HIV) yet appear to be in a rare, non-progressor group (23+ years since diagnosed). I'm supposing I should use a normal life expectancy for a male of my vintage, but somehow that seems slightly wrong...certainly the actuaries insurance companies who've decided I'm uninsurable take exception to that approach...or perhaps they're just risk averse? (grin) Comments?
And congratulations on your impending retirement!
mark.
I couldn't give you the algorithm (trick) behind this or the Mobil Oil puzzle, which I remember, too -- neat trick. Regrettably, this one of mine works only for 2007, and I'm not smart or patient enough to figure it out for future years, if it is possible at all.
Regarding the insurance companies, you 're darn right they're risk averse. It's hard enough to keep from getting "adversely selected" in the insurance business without stretching to cover someone once diagnosed with HIV. That's just good business -- the "healthy" insureds aren't going to pay premiums to cover people with highly probable (someone thinks) significantly higher expected health care costs. The trouble is, that ends up meaning someone like you and thousands of others who are enjoying a healthy, wonderful life (I pray that is true) and expect to continue to do so for years to come don't get the insurance they need. This is a situation where the vast majority of taxpayers, I truly believe, want to step in and help. They want to pay taxes for this kind of situation, and don't expect "the markets," wonderfully effective as they may be for most things, to handle this one. If that's not the case today (few of us really know), it should be fixed.
Thanks for your kind good wishes on my retirement. I return them on your continued good health and enjoyment of this mystery we call life.
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