Will your savings last until the day you die? For many of us, that depends on a big assumption.
Financial advisers help clients plan for retirement by projecting their living expenses up to a certain point. Ideally, they pick the correct age of death. But it’s an educated guess at best.
The last thing advisers want is for aging clients to run out of money prematurely. So they tend to use actuarial tables, genetic history and other factors to calculate one’s average life expectancy. From there, they may add a few years to their projections just to be safe.
Yet some clients balk at their adviser for using age 95 or 100 as their “end of plan.” For individuals who fear living too long, limiting their spending in their 70s and 80s to preserve funds for their 90s—when they might suffer from dementia or other debilitating diseases—makes little sense.