July 25, 2025
I think the biggest decision people face in retirement is the financial one…do I have enough? This is followed by the question of timing…when is it time to go?
For some, there is no choice. A company or a practice has a mandatory retirement age and that’s that. Then perhaps, the question is what to do for the second act after? We’ll get to that later.
We’ll focus here on making a decision when you have choice.
Surprisingly enough, most people make a basic error in their calculation. They think about their age and health, finances and interests and try to intersect all of these competing issues into a holistic view of the decision to retire. Is it time or not?
Let’s take a look at life expectancy, as a clear example of how much misinformation is presented as an underlying assumption that leads to a decision.
If you ask people what life expectancy they could probably expect, most would say something like 80ish or so. We base that assumption because we are told, quite correctly, that the average life expectancy in the United States is the late 70’s. But then we tend to fudge the number higher and raise it because we’re relatively healthy, or whatever. Here you go, United States:
When Social Security first came into existence (1930’s), the age at which it commenced was beyond expected life expectancy. Basically, you shouldn’t need it and if you got it, the odds were high you would only live a few years to collect. Today people expect to receive it for decades. This helps somewhat to understand the mismatch between funding and expenditure. Of course SS is the nuclear issue and no politician wants to seriously tackle it. So we lurch forward into uncertainty.
That upward trajectory is something that goes into our fudge thinking. We extend the trend line and I think it’s reasonable to expect that life expectancy will increase into the future as medical care advances, diseases are cured.
Except that the 80ish estimate is all wrong. Hundreds of thousands of people are making retirement decisions with the calculus built on that faulty input.
Life expectancy is a slippery thing. I think people know that life expectancy is higher in Japan and lower in Russia. So we do know intuitively that environment and behavior plays a role in life expectancy. And we can all easily accept that in broad terms, the stronger your personal economics, the better your health care, the more likely you are to exceed life expectancy averages. But somehow, that doesn’t seep into people’s calculations.
So here is a fact: The average life expectancy of an affluent American male is as much at 15 years longer than lower income constituencies. The differences can be shocking if you haven’t seen them before:
The richest American men live 15 years longer than the poorest men, while the richest American women live 10 years longer than the poorest women, according to the Health Inequality Project. Graphic courtesy of David Cutler
And so, you have to adjust your calculus. If you fall into the top level of income percentile, you need to be thinking in terms of 85-87 years old. So take the lowest number (72) and the highest (87) and average them and you get…79. That’s where people tend to anchor their expectations but it doesn’t hold water. Because it doesn’t consider personal situation and circumstances.
I’d say 90-92 is probably more accurate, assuming you don’t have any clear health issues that mitigate. And I say 90-92 because I’m leaving some room over the next 5-10 years for medical advancement to move the number higher…just consider the effects we’re seeing in the various weight loss drugs.
This changes things, right? If you’re 65 and thinking 79, that’s 14 years. But if you’re thinking 90 that becomes 25 years. Consider all you did in your life from birth to 25, or from 25 to 50. A lot is going to go on!
I asked my doctor to give me a short list of things all people can do to live longer:
First, see your doctor regularly so discovery is early. Second, take your meds because “they really do work.” Third, don’t abuse yourself. Be moderate in your habits. You don’t have to punish yourself with denial, just be reasonable in how much you eat and drink. Finally, elevate your heart rate regularly and if you do, weight-bearing exercises are best (that includes walking).
For the sake of brevity, I’m not going to cover the longevity-lengthening benefit of socialization, we’ll get to that at another time. Just to say that withdrawing behind the curtains of your living room doesn’t enhance life expectancy.
