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.