“There’s this new advice out there that 70 is the new retirement age. That is ridiculous. First of all, the life expectancy for men is 76. You want to retire at 70 and have six years left to retire? Ladies, for you, it’s 81. You want 11 years in retirement?”
That declaration came from personal finance guru David Bach in a recent CNBC interview.
Bach, the author of a series of best-selling financial advice books, was taking aim at another guru, Suze Orman.
Why?
Ms. Orman had declared, “70 is the new retirement age – not a month or year before.” She had also said that no one should retire or claim Social Security until age 70, which is easier to suggest than do.
So who’s right?
My vote goes to Suze for a simple reason. David Bach used the wrong life expectancy figures. He did this even though his source, dutifully hyperlinked in the CNBC website article, was the National Center for Health Statistics.
So what’s the problem?
Trouble is, Bach used the wrong number. The life expectancy for men is 76 years (76.1 if you want to be precise) — but it is life expectancy at birth. This isn’t a prediction of when all men will die. It only tells us that in a group of 100,000 male newborns, half will die by age 76. Half will die later. It’s the midpoint in a sample. It’s not a (literal) deadline.
The same is true for a group of 100,000 female newborns. Half will die by age 81 (again, 81.1 if you want to be precise) and half will die later.
David Bach misspoke because our expected years of additional life change each year. Yes, the life expectancy of a newborn male is 76 years. But the life expectancy of a 65-year-old man is 18 more years.
Ditto women. The life expectancy of a newborn female is 81 years. The life expectancy of a 65-year-old woman, however, is 20.6 years.
Big difference
So while David Bach warns of a tragically short six-year retirement from age 70 to 76, it’s really a good deal longer. Remember, male life expectancy at 65 is 18 years. At 70, it’s still 14.5 years. And if a man lives to 80, as more than 51 percent of newborn males can be expected to do, the additional expected life is 8.4 years. Similar, but longer, figures apply for women.
However you slice it, many people will have a retirement that lasts for decades, not years. Indeed, a 65-year-old couple – both age 65 – can expect that one of them will live about 25 years. So David Bach is simply wrong when he talks about a short retirement as the reward for waiting until age 70.
The rest of the story
But our story doesn’t end there. Life expectancy tablesare really about the distribution of life. Some people live longer than others. Even today, some newborns enter life clutching a short straw. If a child dies before age 20, it is a tragic rarity: Of 100,000 newborns, 98,971 will still be alive at 20, according to NCHS figures. Only 1,029 will have died.
At the other end of the age scale, only 2,111 will still be alive at age 100. The other 97,889 will have died somewhere between age 20 and age 100.
The distribution of life problem
The National Center for Health Statistics Data Brief that was hyperlinked as a source in the CNN story brought some unexpected news. Life expectancy at birth had declined from 78.7 in 2015 to 78.6 in 2016. For men, the decrease was 0.2 years. For women, life expectancy remained the same.
Other reports show that life expectancy has declined for some parts of our population (people with low earnings and limited education), while it has increased for others (people with relatively high earnings and college educations). So just as the pie of rising income is no longer a shared experience, the long advance in human life expectancy is no longer a shared experience.
Long lives aren’t just for the super rich
We’re not talking about the super rich here.
—According to studies by actuaries for the Social Security Administration, people in the top half of the income distribution can now expect to live about five years longer than people in the bottom half.
—At the far extreme, those in the top 10 percent of income can expect to live 10 years longer than those in the bottom 10 percent of income.
In both cases, what might be called “the longevity gap” is growing, not shrinking. Significantly, while the death rates from heart disease, cancer, chronic lower respiratory diseases, stroke, diabetes, influenza, pneumonia and kidney disease fell from 2015 to 2016, only three areas saw death rates rise.
What were they?
Alzheimer’s was the only medically related cause. But death from “unintentional injuries” rose nearly 10 percent. And death from suicide also rose.
I think the life expectancy gap is far more disturbing than the growing wealth or income gap.
Visualizing Life Expectancy
If you’d like to see what life expectancy is all about, visit this link on flowingdata.com, a lovely data visualization website.
https://flowingdata.com/2015/09/23/years-you-have-left-to-live-probably/
The site allows you to enter your gender and age, then shows a developing distribution of deaths over different time periods.
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Related Columns on my archival site:
Scott Burns, “Longevity of the Nerds, ” 1/24/16
Scott Burns, “Live Long, Spend Freely, ” 3/20/16
Scott Burns, “How to Spend More Now, Less Later, 8/2/15
Scott Burns, “Life—How Much Will You Leave on the Table? 4/8/12
On the web:
Kathleen Elkins, “Self-made millionaire: Don’t buy into the idea that ’70 is the new retirement age’,” CNBC.com, October 3, 2018:
https://www.cnbc.com/2018/10/03/david-bach-disagrees-that-70-is-the-new-retirement-age.html
U.S. life tables, National Center for Health Statistics
https://www.cdc.gov/nchs/products/life_tables.htm
Kenneth D. Kochanek, M.A. and others, “Mortality in the United States, 2016,” National Center for Health Statistics Data Brief, December, 2016
https://www.cdc.gov/nchs/data/databriefs/db293.pdf
This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.
Photo: Scott Burns, Rainbow in Santa Fe, 2009
(c) Scott Burns, 2018