According to Ourworldindata.org, global life expectancy, since 1900, has “has more than doubled and is now approaching 70 years.” An example of this improvement is given by WorldLifeExpectancy.com: In 1960, a male born in the United States had a life expectancy of 66.6 years. As of 2011, the life expectancy of a male born in the U.S. was 76.1. That’s an improvement of more than 14% over just the last 51 years.
Perhaps that rate is unsustainable going forward, but JP Morgan recently released some compelling data that may change the way you think about your life expectancy, and therefore your retirement’s duration. According to their 2015 Guide to Retirement, if you are currently age 65, and a male, you have a 21% chance of living to age 90. For a 65 year old woman, that probability improves to 33%. For a couple age 65, there is a 47% likelihood at least one will live to age 90 (see graphic below):
Improving longevity is one reason we feel it is imperative for retirement plans to stretch out at least to age 85 or 90, if not beyond. Obviously, there are many variables that must be accounted for when creating retirement cash flow illustrations: portfolio size, Social Security benefits, portfolio rates of return, etc. However, in an era of historically low interest rates, planning for a longer than expected retirement may mean adjusting your planned spending in the early years of your retirement as well as perhaps taking on more exposure to equities than you otherwise might.
