Many people are going to live longer than they think, you could be one of them. I am sure you are familiar with the term “Life Expectancy”. It is a term you have heard most of your life. You may think you know what it means, but I am confident that I will surprise you when I reveal the complete definition of life expectancy. Over the last 13 years, in the hundreds of live presentations I have made, they were always surprised when I told them.
Men and women in this country have a combined life expectancy of age 78.
Now, most people think that means most people in the US die by age 78. But that is not the case. Life expectancy is a statistical term. It is a “mean average”. It means “50% of people will die before age 78 and 50% of people will live up to and beyond age 78”. So, at birth, you had a 50% probability of living up to and beyond your life expectancy of age 78. A 50% chance of living up to and beyond age 78 is a high probability that you should plan for.
But that is only one aspect of life expectancy. There is a second aspect of life expectancy that hardly anybody knows. The second part of the definition of life expectancy is this:
The longer you live, the farther out you push your life expectancy
This chart explains the second part of the definition of life expectancy. The horizontal axis has ages ranging from age 62 up to age 105. The vertical axis has the probability of living to those ages. If a man lives to age 62, with a 50% probability, the definition of life expectancy, of living until age 84. In other words, if a man lives until age 62, he pushes his life expectancy out to age 84. If a woman lives until age 62, she pushes her life expectancy out to age 86 and there is a 50% chance that at least one of them, either the man or woman, will live to age 90.
To the men, I have some bad news for you. If anybody is going to live to be age 90, it ain’t going to be you. Women overwhelmingly outlive men, it isn’t even close.
If we look at the number of men and women alive at age 85, there are twice as many women. There are also three times as many women alive in their 90s than there are men. Because of that, Social Security is a bigger issue for women. They collect their benefit payments for a longer time than men do, because on average they live longer than men. But men, there is still some good news. If you live to age 62, you still have a good chance (50%) of living into your mid-80’s.
When I ask people why they claimed at age 62, many of them tell me it’s because of their ‘life expectancy’. If their life expectancy is 78, it makes ‘more sense’ to claim at age 62 than to claim later.
Those calculations involved determining the Breakeven Age, between claiming at age 62 or claiming at a later age, like age 66 or 67. They calculated their Breakeven Age to be around age 78 or 79. If they lived beyond those ages, they would be better off delaying to a later age as opposed to claiming at age 62. They did not think they would live that long and claimed their Social Security at age 62. What they did not realize is that if they live until age 62, they push their life expectancy out to age 84 for a man and age 86 for a woman. They have a much higher chance or probability of living up to and beyond age 78 or age 79 than they do of dying before those ages.
By the way, almost everybody who does that Breakeven Age calculation, does it wrong. They calculate a Breakeven Age that is too high or too old. If you want to see why their Breakeven Age calculation is wrong, see the article I wrote showing why their Breakeven calculation is incorrect, and the right way to calculate your Breakeven Age.
Claiming your Social Security at age 62 because you don’t think you are going to live that long is not a good reason to claim your benefits early. You have a much higher chance of living up to and beyond age 78 than dying before age 78. In fact, you have a high probability of living into your mid-80’s.
Words of Wisdom from Micky Mantle
The famous baseball player, Micky Mantle, is quoted as saying: “If I knew I was going to live this long, I would have taken better care of myself.”
His father and grandfather both died in their 40s, so he believed he would die young as well. Mickey Mantle ended up living into his 60s, but did not have a very healthy lifestyle. If he had taken better care of himself, he could have lived a lot longer.
If you claim at 62 and end up living into your 80s, you could end up like Mickey Mantle.
“I would have made a different Social Security claiming decision if I knew I’d live this long. I would have claimed my benefits at a later age, instead of claiming them at age 62. If I had done that, I would have ended up receiving much more Social Security income over my Retirement Lifetime”.
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