If you were asked how long you think you’ll live, you’d probably do a quick mental scan of your grandparents, parents, aunts, uncles, and other family members. Will you be like your maternal grandmother, who survived to 102—outliving several of her own children? Or, will you inherit the heart problems that cut your father’s life short?
But whichever way you might think you lean, there’s a good chance you’re shortchanging yourself. Recent research from The Brookings Institution found that most of the 26,000 participants in a health and retirement survey underestimated their life expectancy by a long shot. Roughly half of those who predicted that they had zero odds of making it to age 75 actually did. Of those who thought they had a 40% to 50% chance of living to age 75, almost three-quarters made it past their 75th birthday. We seem to have a blind spot when it comes to picturing ourselves getting old.
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We all know that life expectancy is improving. But most of us don’t understand what this means in real terms—and why using previous generations as a guide to life expectancy is misguided at best. According to a recent article in The Atlantic, life expectancy has risen globally at a rate of about three months per year for nearly two centuries. That’s despite two world wars, assorted epidemics, and the introduction of the commercial cigarette. On this basis alone, if you were born 60 years after your maternal grandmother and followed in her longevity footsteps, you could expect to live to 117.
Of course, an array of life expectancy calculators is available online at no cost. If you’re curious about what you’ll look like 10, 20 or more years from now, there are free apps that purport to give you a glimpse. Just upload a photo of yourself and choose an age. Rules of thumb (life expectancy increases with education) and simple longevity tests (waist-to-height ratio) abound.
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But in Canada, the real work of building knowledge and awareness around longevity is just beginning. Other countries are already well ahead of us. Take the United Kingdom, for example. Club Vita, an organization founded in the U.K. in 2009 and devoted exclusively to leading-edge longevity analytics, uses pension plan mortality experience collected and analyzed on an annual basis to predict life expectancy with an unprecedented level of accuracy. It can even sort longevity by postal code. And, last month, Steve Webb, the U.K.’s minister of state for pensions, announced that he believes life expectancy should be part of the guidance provided to help people decide how much to save; he wants that guidance to be given face to face to any pensioner who requests it.
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Getting a better handle on life expectancy is critical to retirement planning—whether you’re a DC pension plan member trying to avoid outliving your retirement savings or figuring out how much to save for retirement, or a DB plan sponsor trying to assess how the new mortality tables released by the Canadian Institute of Actuaries apply to your members. If recent developments in the U.K. are any indication, Canadian plan sponsors and members can expect longevity to be increasingly front and centre for the foreseeable future.