How One Tool Can Help Answer the Biggest Unknown in Your Retirement Strategy

How long will you live? It’s one of life’s biggest questions. Time can pass quickly. If you’re like most people, you’ve wondered just how much time you have left. Of course, it’s also an impossible question to answer. We can’t predict the future; thus we can’t determine precisely when we will pass away.
 
However, we can use data to make an educated guess about how long an individual’s lifespan will be. In fact, there’s an entire group of professionals dedicated to that effort. They’re called actuaries, and they’re often employed by insurance companies.
 
Actuaries are highly trained professionals who rely on a deep understanding of mathematics and statistics to help companies manage risk. In the life insurance industry, that often means estimating how long a person is likely to live.
 
Fortunately, you don’t have to be a trained actuary to estimate how long you might live. The Society of Actuaries and the American Academy of Actuaries have partnered together to make their work accessible online. You can use their Longevity Illustrator to estimate your life expectancy and how long you may live in retirement.
 
You submit some basic information about your age, gender, and health to the Longevity Illustrator. It then generates conclusions about your life expectancy. The conclusions are conveyed in a range of probabilities. For example, it may tell you that you have a 90% probability of living to 75 but only a 10% probability of living to 95.1 You can even submit information for you and your spouse and get the probability that one or both of you will live to certain ages.

Why is it helpful to know your life expectancy? 

Thinking about your own death certainly isn’t a pleasant experience. You might even think it’s someone morbid to estimate the timing of your own death. However, understanding life expectancy can help you better plan for retirement and make your assets last.
 
Assume you plan on retiring in your mid-60s and you’ll rely on withdrawals from your 401(k), IRA, and other savings to fund your lifestyle. How much should you take in withdrawals each year? How long do you need your savings to last? Ten years? Twenty? Thirty?
 
Life expectancy helps you answer those questions. Again, you can’t predict exactly how long you will live. But you can make a reasonable estimate based on probabilities. If you know there is a reasonable probability that you’ll live into your 90s, you may change your spending habits in retirement so your assets will last. You can even use your life expectancy estimate to determine how much you should withdraw from your savings each year.

How can you make sure your income lasts for life? 

While the Longevity Illustrator is a helpful tool, it is still an estimate. You can’t truly know with 100% certainty how long you will live.
 
Fortunately, you can use guaranteed* income to create financial certainty and stability in retirement. Guaranteed* income lasts for life, regardless of how long you live. Social Security is an example of guaranteed* income. A lifetime pension benefit is another example.
 
You can even use a financial vehicle like an annuity to create your own guaranteed* lifetime income. Many annuities offer the opportunity to convert a portion of your savings into an income stream that is guaranteed* to last as long as you live. A financial professional can help you identify strategies to maximize your guaranteed* retirement income.
 
Ready to create retirement income that lasts for life? Let’s talk about it. Contact us today at First Fidelity Group. We can help you analyze your needs, estimate your life expectancy, and implement a strategy. Let’s connect soon and start the conversation.
 
1https://www.longevityillustrator.org/
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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