Life Expectancy for Financial Planning
If you're doing financial planning, it is useful to know how long you
are likely to live. However, your life expectancy (the average age
that a set of people like you will live to) is not the right number to
use. Your median life expectancy is an age such that half time you
will die before that age and half the time you will live
longer. Living longer is usually good, but I, for one, don't do
financial planning such that I'll run out of money when I reach my
expected length of life -- that would mean a 50% chance of running out
of money before I die.
What to do?
Find the age you have a 25% chance of living past (see our
calculator), and to use that more conservative number in your
planning.
If you're transferring money to you children, it's also good to know
the age you have a 25% change of dying before, as early death can
affect your inheritance taxes.