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One of the questions I am often asked by clients is “how much money do I need to retire?”  Advertisements on TV and in magazines would have us believe that when we have accumulated this “magic number” we are ready to stop working.  What the ads fail to mention is that this is just one of the important numbers you need to know to ensure a successful retirement.   Just as critical in your planning is a realistic estimate of how long you will live.

In my last blog, A Different Angle, I wrote about the tendency of clients to put off their estate planning.  One reason for their procrastination I’ve heard from more than one person is if they delay drawing up their documents, they will delay their death as well.  This is usually said in jest.  The irony is, when we are working on their financial plan and I want to assume a mortality rate in their 90s, they tell me they are not going to live that long!
Ron Gebhardtsbauer, who heads up the Actuarial Science Program at the Sheal College of Business at Penn State University estimates that a 65-year-old man has a 30% probability of living to 90, while a 65-year-old woman has a 40% chance.  A married couple who is 65-years-old has a 60% chance one of them will live until at least age 90.
So, what mortality assumption should you use in your retirement planning?  I was recently made aware of a tool called The Longevity Game on Northwestern Mutual’s website that takes factors such as your health, behavior and family history into account when producing your average life expectancy.  You should play – the results might surprise you.  It says I could live to age 98, so it looks like I have a few more decades of work ahead of me!

Christine Carleton, CFP®