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Life expectancy: Will you outlive your retirement savings?

July 21, 2012
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Now that super funds, fund managers and other financial service providers have (nearly) survived the GFC, a lingering issue concerning the super industry is ‘adequacy’ (or lack of ‘adequacy’), that is, the worry that Australians will outlive their retirement savings. Okay, the industry is pretty obsessed with the rise and rise of self-managed super funds (SMSFs), the ban on commissions from July 2013, the introduction of a no-frills MySuper product, and the overweighting in equities (shares) by most super funds. Even so, the perennial topic (pardon the pun) seems to be the risk of Australians running out of money in retirement and relying solely on the Age Pension.

A key bit of information in any retirement plan is a guesstimate on your expected life span – your life expectancy. Anyone saving for retirement wants to save enough money to at least last their lifetime, at their desired level of income (see SuperGuide articles A comfortable retirement: how much is enough? and Setting a retirement target: Living on more than $55,000 a year). Many Australians also want to leave money to family members after they die.

Every five years, the Australian Government Actuary releases the latest data on average life expectancies, that is, how many years you’re expected to live, on average. The table below contains the most up-to-date information (released on 27 November 2009) on expected lifetimes. (The next batch of data on life expectancies will be released in 2014).

How long are you going to live?

You can find out how long you’re expected to live, on average, by locating your current age in the table below, and then checking the ‘female’ column or ‘male’ column, depending on your gender. For example, if you’re 55 years of age, you can expect to live another 30.53 years (if a female) and 26.95 years (if a male). If you’re 65 years, your average life expectancy is 21.62 years (if a female) and 18.54 years (if a male).

The longer you live, the greater your life expectancy becomes.  At age 55 years, a female can expect to live to 85.53 years on average, while a 70 year-old female can expect to live to 87.42 years – an extra two years.

Note: The table contains average life expectancies, and you may well live longer than the average. For more information on Australian life expectancies see Updated life tables: is the tide shifting for Australian life expectancies?

Average life expectancies: No of years to live from current age
Years to live (on average) Years to live (on average)
Current age Female Male Current age Female Male
0 83.67 79.02 56 29.61 26.08
1 83.04 78.44 57 28.70 25.20
2 82.07 77.47 58 27.79 24.34
3 81.08 76.49 59 26.89 23.48
4 80.10 75.50 60 26.00 22.63
5 79.11 74.51 61 25.11 21.79
6 78.11 73.52 62 24.23 20.96
7 77.12 72.53 63 23.35 20.14
8 76.13 71.54 64 22.48 19.34
9 75.14 70.55 65 21.62 18.54
10 74.14 69.55 66 20.76 17.76
11 73.15 68.56 67 19.92 16.99
12 72.15 67.57 68 19.08 16.24
13 71.16 66.58 69 18.24 15.49
14 70.16 65.58 70 17.42 14.76
15 69.17 64.59 71 16.61 14.04
16 68.19 63.61 72 15.82 13.33
17 67.20 62.63 73 15.03 12.64
18 66.22 61.66 74 14.27 11.96
19 65.24 60.71 75 13.51 11.31
20 64.25 59.75 76 12.78 10.68
21 63.27 58.80 77 12.05 10.07
22 62.29 57.84 78 11.35 9.48
23 61.31 56.88 79 10.67 8.92
24 60.32 55.93 80 10.01 8.38
25 59.34 54.97 81 9.37 7.86
26 58.36 54.02 82 8.75 7.36
27 57.38 53.06 83 8.17 6.89
28 56.40 52.11 84 7.61 6.45
29 55.42 51.16 85 7.08 6.03
30 54.44 50.20 86 6.58 5.64
31 53.46 49.25 87 6.11 5.27
32 52.48 48.30 88 5.68 4.94
33 51.50 47.35 89 5.28 4.63
34 50.52 46.40 90 4.91 4.36
35 49.55 45.45 91 4.57 4.11
36 48.58 44.50 92 4.27 3.89
37 47.60 43.55 93 3.99 3.69
38 46.63 42.60 94 3.75 3.51
39 45.66 41.66 95 3.53 3.36
40 44.70 40.71 96 3.33 3.22
41 43.73 39.77 97 3.16 3.10
42 42.77 38.83 98 3.00 2.99
43 41.81 37.89 99 2.86 2.90
44 40.85 36.96 100 2.74 2.81
45 39.90 36.03 101 2.63 2.73
46 38.95 35.10 102 2.54 2.66
47 38.00 34.18 103 2.46 2.60
48 37.05 33.26 104 2.38 2.54
49 36.11 32.34 105 2.32 2.49
50 35.17 31.43 106 2.26 2.44
51 34.24 30.53 107 2.20 2.40
52 33.31 29.63 108 2.15 2.35
53 32.38 28.73 109 2.09 2.30
54 31.45 27.84
55 30.53 26.95

Source: Compiled from Australian Life Tables, 2005-2007, Australian Government Actuary (www.aga.gov.au). Released 27 November 2009. Next update due in 2014.

Life expectancy: Will you outlive your retirement savings? Super Guide

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Comments

  1. Terry says:
    November 29, 2009 at 4:49 pm

    Hi Trish

    Thanks for your monthly newsletter.

    In the 2 articles about life expectancy, you use the phrase ‘average life expectancy’.

    In my experience most people (and I include myself before I did some more research a few years ago) don’t really know what ‘average life expectancy’ really means. I used to ask people and very few had the concept clear in their mind

    I suggest that most 65 year old males don’t really know the meaning of the phrase ‘at age 65 a male can expect to live 18 years on average’.

    But if you tell a 65 year old male (who usually still thinks of himself as invulnerable) that half of today’s 65 year old males will be dead in 18 years (and of course the other half won’t) that usually gets their attention pretty quickly, and often leads to some constructive discussions about their future planning.

    Of course we all plan to be in the half who live longer than ‘average’, but it makes the ‘what-if’ discussions a little more focused.

    I suggest that in future, you include a definition of ‘average life expectancy’ in future references to this important matter.

    All the best for Christmas and 2010.

    Terry

    Reply
    • Jon Kalkman says:
      December 17, 2012 at 3:27 pm

      I agree with Terry. The average life expectancy is meaningless. It is not even an average, it is the median. Of the present crop of 65 year old males, 50 % will be dead by age 84. For females, 50% will be dead by age 88.

      Of those who survive, 5% of that group will go on until age 97 (males) and age 100 (females)

      It means that if I am 60 today and I want to plan with a 95% certainty that I will not run out of money in retirement, I need an income stream that lasts for at least 35 years or more and that income stream needs to at least keep pace with inflation. In addition I could then face some significant costs for heath care and age care.

      People who use a retail or industry super fund to pay them a pension will find that all their units have been sold ( and their pension stops) well before that time.

      Welcome to Centrelink, if Australia can still afford to pay the age pensions to the hoards of retired people at that time.

      Reply

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