When our son turned 21 last year, he cracked that it was probably the last ‘big birthday’ number he would be excited to reach. I asked “How about age 100?!”
Reaching age 100 is a mark that most people would aspire to reach, but it is exceedingly rare. Only about 0.02% of Americans have reached that age, although a recent AIG study / ad campaign says that 53% of Americans would like to reach 100.
I guess it is no surprise that a financial services company like AIG is talking up the idea of reaching age 100, as that encourages more people to save more money. They have a whole website set up to question if people are saving enough to reach that age and afford a 40 year retirement.
Looking through it, the first thought I had was would it confuse people and possibly discourage people from shooting for an early retirement?
I think so – and in most cases – that worry would be highly unwarranted.
First, it’s helpful to know that the US Census Bureau that is charged with estimating demographics has historically done a very poor job. While they say that “50% of kids born today will reach age 100” – they are speculating on advances in medical care no one can really know at this point.
Just before 2000, the US Census Bureau projected 131K Centenarians by 2010, but the actual number was less than half of that (52K). Today, we are almost to the 2020 Census and the latest estimate as that there are 72K over age 100. They forecasted 3x that many by now.
Second, as I showed in this POST, when I put longer life expectancies into our FIREcalc analysis, the probabilities went up, not down. The fact is, the longer money is invested, the more ‘stable’ the rate of return becomes.
Our financial plans are built to us reaching age 90. We won’t be absolutely broke then, but that’s as far as we estimated things. Our financial advisor uses the same life expectancy in his estimates. If you look at the dismally depressing actuarial tables that insurance companies use, you will see that age 90 is more than reasonable. Especially for both a husband & wife to reach that age.
My conclusion is that age 100 is probably too optimistic for most people. The odds of reaching that age are still very low and in planning for it, you might paradoxically be underestimating your odds of outliving your nest egg. Like many things ‘Have you planned to live to 100’ makes a better headline than financial plan.
What age have you planned out for?
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