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Top Charts Canada – Life expectancy doesn’t tell the whole story

AUTHORED BY ERIK PICKETT, August 2020

Question:

How likely is a 65 year old to die at the exact age of their life expectancy?

Answer:

Fairly low. The chances of a 65 year old dying in the same year predicted by their life expectancy is less than 1 in 20 (around 4%). They are much more likely to die at a different age. In particular, there is over a 50% chance they will die later than their life expectancy.

Probability of a 65 year old dying before, after or in the year of their life expectancy - Canada

Source: Club Vita analysis for a 65 year old in 2020 assuming CPM Private (2014) base mortality with CPM-B improvements

Key takeaways

  • There is only a 4% chance that a 65 year old will die at the age of their life expectancy.
  • There is over a 50% chance they will live longer than their life expectancy.
  • Life expectancy does not tell the whole story.

Over-reliance on life expectancy figures has the danger of over simplifying the challenges of financial planning for the future. Even if we ignore different factors that influence how long someone is expected to live, such as affluence, lifestyle and health, there is still a whole range of possible outcomes (shown below).

Probability of a 65 year old dying at a given age - Canada

Source: Club Vita analysis for a 65 year old in 2020 assuming CPM Private (2014) base mortality with CPM-B improvements

A key question is:

How can individuals plan for such an uncertain future?

What do you think?

Erik Pickett, Chief Product Officer, Club Vita