Life Expectancy: What's the Right Number?

Every reader of this article has probably, at one point or another, asked their clients some variation of the "what's your time horizon" question. This question gets trickier as clients get older. For the near- or in-retirement investor, the advisor must consider the life expectancy o...

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Bibliographic Details
Published in:Journal of Financial Planning 2008-08, Vol.21 (8), p.32
Main Author: Riepe, Mark W
Format: Article
Language:English
Subjects:
Actuarial assumptions
Advisors
Financial planners
Financial planning
Life expectancy
Online Access:Get full text
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Summary:Every reader of this article has probably, at one point or another, asked their clients some variation of the "what's your time horizon" question. This question gets trickier as clients get older. For the near- or in-retirement investor, the advisor must consider the life expectancy of the client. This question pushes the advisor out of the comfort zone of investments and into the waiting arms of the actuarial sciences. Avoidance is not an option, as the many ubiquitous calculators that advisors use to help with retirement planning all tend to require an input to this question. So what's the right number? To answer that, it's important to understand a few aspects of life expectancy. These are: 1. Headline life expectancy isn't relevant. 2. Your clients aren't average. 3. It's getting better all the time.
ISSN:1040-3981