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Sizing Up a Client’s Lifespan

Sizing Up a Client’s Lifespan

Advisors should assume clients will live to at least 90 when they set up retirement plans using insurance and investment products

If you’re helping your clients with insurance decisions, the “Commissioners 2001 Standard Ordinary Mortality Table” is a good place to start.

This mortality table is the gold standard for determining how long your clients will live. That information can also aid your investment planning. Introduced by the Society of Actuaries and adopted by the National Association of Insurance Commissioners, this table is used by most states in insurance underwriting and, due to increased longevity, has been extended to age 120.

Based on this table, the average life expectancy of a 65-year-old male, for example, is 82. But it gets a bit more complicated than this.

The Society of Actuaries says that based on the organization’s separate calculations for pension funds in 2013, a 65 year-old male more likely will live to age 88.

Meanwhile, the number of persons reaching age 85 should more than triple to 14 million from 4 million today, according to a study by New York-based Mercer, a benefits consulting firm. In addition, modal ages for death (the ages at which the largest number of people die) have continued to increase and are now in the late 80s for many groups.

David Littell, program director of the Retirement Income Certified Professional designation at the at the American College, Bryn Mawr, Pa., says advisors should act as if their clients will live longer than the tables indicate. He cites Social Security Commission statistics that estimate one of four people will live past the age of 90. One of 10 might live past age 95.

“Most Americans build their retirement plans expecting to live to age 82,” he says. “If it turns out that they live to age 92 or older, how are they going to make their money last an additional 10 years?”

Advisors, he suggests, should assume clients will live to at least 90 when they set up retirement plans using insurance and investment products. Many clients, he says, also should consider taking social security at age 70.

Uncertainty can’t be eliminated. He recommends that advisors and their clients use the “Living to 100” online calculator at That online calculator factors personal history and family health history in the longevity calculation.

A 2012 Society of Actuaries research project on mortality suggests that financial advisors should identify the clients that typically live longer and appropriately structure their finances. 

What do those clients look like? They typically have the following characteristics, according to the society: Their mother was younger than 25 when they were born. Females typically live longer than males. People who live in rural or low-income areas tend to have shorter life expectancies than those from urban areas. Wealthier, more highly educated and married populations tend to live longer.

Gerontologists say that longevity planning makes sense. Those who live longer are likely to suffer greater costs due to the need for long-term care. Advisors also face the task of helping clients with deteriorating cognitive functions.

Leonid Gavrilov, gerontology professor at the University of Chicago, cites other characteristics that may help predict client longevity: The heaviest 15 percent of the population have little chance of living to a ripe old age. The wealthier, more highly educated and married populations tend to live longer.

Amy Symens Smith, chief of the age and special populations branch at the U.S. Census Bureau, says that a majority of the oldest U.S. citizens live in urban areas.

"As age increases, the percentage living in urban areas also increases," Smith says. Census Bureau data show that 85.7 percent of centenarians lived in urban areas in 2010. That compared with 84.2 percent in their 90s, 81.5 percent in their 80s, and 76.6 percent in their 70s. In addition, states with the largest populations, such as California, New York, Florida and Texas generally have the most centenarians.

"Living in the city, you have a lot more mental stimulation and the symphony and better doctors and hospitals and more social networking," Smith explains. "There are more resources, and there is better transportation."

Four behaviors are responsible for much of the illness and death related to chronic diseases, notes the U.S. Centers for Disease Control, Atlanta. Those include lack of physical activity, poor nutrition, tobacco use, and excessive alcohol consumption. Seven of 10 deaths among Americans each year are from chronic diseases. Heart disease, cancer, and stroke account for more than 50 percent of all deaths each year.

2014 Centers for Disease report finds that people can live longer if they practice one or more healthy lifestyle behaviors— not smoking, eating a healthy diet, getting regular physical activity and limiting alcohol consumption. 

Not smoking provides the most protection from dying early from all causes.

People who engaged in all four healthy behaviors were 66 percent less likely to die early from cancer, 65 percent less likely to die early from cardiovascular disease, and 57 percent less likely to die early from other causes compared to people who did not engage in any of the healthy behaviors.

The end result: If you have clients that are, by dint of lifestyle and demographics, bound to break the actuary tables for life expectancy, find additional income streams to ensure they don’t also outlive their money.

Alan Lavine is a contributing writer to and REP. magazine and author of some 15 books on investments and insurance. He also writes a column for Dow Jones Marketwatch's "Retirement Weekly."

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