, and Joe Tomlinson
, an actuary and certified financial planner based in Greenville, Maine. Both caution that they are not in the business of estimating individuals' life expectancies but instead look at broad trends for specific populations--for example, how an individual's health profile compares with that of other life insurance customers. However, learning how these pros look at longevity risk factors among broad populations can help us identify risk factors in our own lives.
Here's how Leydon and Tomlinson responded when asked about the role each of the following factors plays in life expectancy.
: Not surprisingly, Leydon says an individual's health profile is among the most important considerations in the underwriting process.
"In general the biggest risk factors that we consider also correlate with what the largest causes of death are [in the United States]," says Leydon. She mentions cancer and cardiovascular, respiratory, and blood diseases as among the top risk factors but adds that factors such as family longevity, height and weight, and whether the person uses tobacco products also come into play.
From there she says she would ask questions about the individual's personal health history, asking whether he has been diagnosed with any kind of chronic health problem, whether he visits a doctor on a regular basis,
and whether he takes any medication and why.
Tomlinson mentions many of the same factors, along with whether the individual is a heavy drinker and whether the individual gets regular exercise.
: Leydon says that after a person's health profile, the next obvious factor to look at is his line of work. In particular, Leydon says an underwriter would take note of whether the person has a dangerous occupation or is in the military. Along with the occupation itself is whether the person receives health benefits from work because a lack of access to health care is another risk factor.
Although Leydon says that income in and of itself is not seen as a risk factor in evaluating someone for life insurance, both she and Tomlinson point to it as a factor that can have an impact on an individual's health. "There's indication that overall life expectancy has been improving, and there's some evidence that it's increasing more for the more upscale," says Tomlinson. A 2008 brief by the Congressional Budget Office, titled "Growing Disparities in Life Expectancy
," reported that in 1980 life expectancy at birth was 2.8 years greater for those at the top end of the socioeconomic spectrum than for those at the bottom, but by 2000 that gap had risen to 4.5 years. The life-expectancy gap between 65-year-olds in the top and bottom groups had expanded from 0.3 years to 1.6 years in that time span, says the report, which points to several possible explanations for this growing disparity, including gaps between the groups in the rate of smoking-related diseases, obesity, healthy lifestyles, and access to health care.
Time spent abroad:
Whether living overseas for work or just visiting, spending significant time in a country with limited access to health care or one that has exposure to diseases such as drug-resistant tuberculosis can increase someone's risk of premature death, Leydon says.
Risky hobbies such as skydiving would also be a red flag in the underwriting process, Leydon says. Other behaviors that increase mortality risk include alcohol or drug abuse or a driving record that includes multiple speeding tickets, accidents, or DUIs. Spending time in prison can also have a negative effect on life expectancy, she adds.
An Educated Guess at Best
None of these risk factors guarantees a life expectancy shorter than the average. Indeed, how long you live could be determined by just one of the factors mentioned above, a combination of factors, or none at all.
Tomlinson, for one, thinks too many people run the risk of outliving their money. "I think people tend to underestimate how long they might live," he says. "They look at life expectancy from birth. They may look at Social Security tables from age 65. If they are in good health and take good care of themselves, they may well live longer than the Social Security tables suggest."
Tomlinson sees the trend toward rising life expectancies continuing. "If mortality continues to improve, then the kinds of ages we see people dying at today are going to be different than the ages we see them dying at in 30 years," he says.
He cautions that tomorrow's longer life spans require today's retirement savers to think not just about having enough money to support a longer retirement but also enough to pay for additional costs, such as long-term care.
One last point to remember is that life expectancy is not a fixed measure, and it's wise to revisit it as you get older. An individual who experiences serious health problems early in retirement would likely make different planning decisions than someone who remains reasonably healthy well into his 70s or 80s. Folks in the latter group might want to revisit their plans and assume a somewhat higher life expectancy than they did in their mid-60s.
Also be aware that, statistically speaking, life expectancy rises as we age. That's because life expectancy measured at birth factors in those who will die young, which pulls the average age of death down for the group. Average life expectancy measured at later ages won't include those earlier deaths and will thus be higher. For example, for men who are currently 65 years old, life expectancy at birth was 80 whereas today it's closer to 85.
The point is not to fixate on one number when calculating life expectancy for retirement-planning purposes. Build some flexibility into your plan so that if things change as you go along, you'll be able to adjust accordingly.