“Boomers’ Eagerness to Retire Could Cost Them”
... or "Fun With Mortality Tables"

I really didn’t intend to make this subject my personal crusade. I thought my “Benefits of Delaying Retirement” article would be my last on this topic for a while, but I’m all fired up again after reading this article on the USA Today website, which includes two very spiffy charts in the left hand margin. One has to do with life expectancy and the other shows an actual breakeven analysis of postponing taking social security for one year, from age 62 to age 63.

The life expectancy table is interesting in itself. Charts like this always pleasantly surprise me. For example, at age 62, which I will reach in November, the chart shows my life expectancy will still be 83.9. On average men my age will have a full 21.9 years left. Of course, Melanie, the platinum wife, is still calling for “fifteen good years left,” so I guess the last 6.9 will just be “average.”

The platinum wife herself will reach age 62 NEXT July (emphasis hers, she is much younger than I :-). For all of you ladies who reach that age, your life expectance will be 86.5, so you’ll have a full 24.5 years left.

Now let me introduce you to a concept I first ran into in the IRS expectancy tables. It’s called “joint life expectancy,” which is the life expectancy of the later of two spouses to die. This is not insignificant, because it is THIS number, isn’t it, that you are referring to when you use an expression like, “We don’t want to outlive our money,” or “We want our money to last as long as WE live.”

Now if Melanie and I died compliantly in obedience to the life expectancy tables, our “joint life expectancy” would basically be her life expectancy, because I’m “supposed” to die first. But life is full of chances, and of course nobody ever dies “on average.” There is a lot of variation between spouses, so our joint life expectancy will always be longer than the later of our individual ones. So I might croak at 80 while Melanie lives to 90, or vice versa. And the tables reflect this. So the joint life expectancy of a couple, both age 62, is actually 90.7! No wonder the actuaries are worried about the solvency of social security!

Now here’s what has me fired up. When I wrote, "The Benefits of Delaying Retirement," I mentioned that there is a breakeven point beyond which you are better off having waited. And I duly exempted those of you who have legitimate expectations of lower life expectancies, due to illness or family history. For the rest of you, take a look at the second chart in the USA Today article. It shows the actual annual dollar benefit or deficit of delaying retirement by one year, in this case from age 62 to 63. In this case, the crossover point turns out to be between 79-80.

Now that’s for one year of delay. Imagine what four years of delay, to our full retirement age of 66, earned up to my average life expectancy of 83.9, Melanie’s of 86.5, or actual “lucky survivor” at 90.7. At those ages, the extra “waiting bonus” would be about $5,000, 9,000, or $16,000 respectively FOR EACH YEAR YOU WAIT. You could be giving up tens of thousands of dollars and all that flexibility to earn extra income during that period of your life just to satisfy this vague idea that you want to get your hands on that free money. As someone whose mission is to help you get “the best out of the rest of your life,” wouldn’t I be remiss NOT to warn you about a mistake of this magnitude?

Now let me throw in one more intuitive argument, with a simple question. Who is more financially at risk to “outlive their money”? The 50% of the people who “beat the averages” and live longer than their life expectancy? Or the 50% who “die early”? Obviously, the first group. So in fact, isn’t someone who takes social security early in effect betting that they will die sooner?

For the fact is, if you live to your life expectance, taking anything early is a bad deal. With the male age 62 life expectancy of 83.9, it’s a bad deal for men. With the life expectancy of 86.5 for you ladies, it’s a VERY bad deal for women.

Personally, I’ve decided to try to hold out to age 70.

(Tomorrow, even more “fun with mortality tables.”)


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