Life Expectancy Calculator

Written by Hersh Stern Updated Thursday, November 9, 2017

Retirement planning would be so much easier if you only knew how much longer you had to live. That's what we call your "life expectancy." Absent the power to know the future, your next best option is to estimate your life expectancy using a standard life expectancy calculator or table. A life expectancy calculator will also help you make better decisions about annuities. Annuities offer you a tax-deferred way to save for retirement and then to guarantee income payments for as long as you expect to live. The following life expectancy calculator shows you the average number of additional years you can expect to live, based only on your age and gender.

  • Gender:

Life Expectancy Graph for 40 Year Old Male

The dangers of underestimating your life expectancy

Recent studies by Michigan State University economics professor Todd Elder show that a significant number of Americans underestimate how long they are going to live.

Prof. Elder analyzed the answers of 58 to 61 year olds to the question "what chance do you have of living to age 75?" He then compared the respondents' predictions to their actual mortality data when enough time had passed to find out if they had guessed their life expectancies correctly.

You may life much longer than you think

Among his findings: More than half the respondents tended to underestimate their life expectancy!

For the group that believed they had zero chance of living to age 75, nearly 50% did. And 60% of those who thought they only had a 10% chance of reaching 75, actually lived that long.

Not only do we tend to underestimate our life expectancy, but our actual life spans continue to increase each year with new breakthroughs in medicine and health care services. Plus, there always are some lucky people who defy the odds and live even longer than the statistics would suggest, so you need to plan for that possibility happening to you, too.

Couples should consider combining their timeline

How annuities can help with the life expectancy conundrum

There are not many financial products that provide you with income that you can never outlive. Annuities are becoming increasingly popular because they provide this protection.

In the “good old days,” you could count on your company pensions to provide you with a lifetime income after you stopped working. But the U.S. economy has shifted away from those plans towards 401(k)s and individual retirement accounts which put a greater burden on you to save for your retirement and make sure your savings produce enough income to cover your needs when you are no longer working.

This is even more important because Social Security, which many people have viewed as the foundation of their retirement planning and a safety net, is often not enough.

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What do the experts say about annuities?

Many experts say that annuities are a good solution for protecting against the risks of outliving your assets. A 2014 study by the Brookings Institution found strong arguments in favor of longevity annuities -– a type of deferred income annuity -- as an answer to the challenges posed by life expectancy uncertainty, the move away from pensions and other trends.

“We are optimistic that longevity annuities can significantly increase expected lifetime well-being for middle and upper-income retirees who have substantial financial assets at the time of retirement,” the authors wrote.

When analyzing if a longevity annuity is right for you, a good exercise is to compare the monthly annuity payment with what you could make by investing your money in an equally low risk portfolio. An assumption about your life expectancy is crucial to this analysis since the longer you live, the better deal an annuity becomes.

How your life expectancy determines annuity costs, benefits

The amount of monthly income you receive from an immediate or longevity annuity is determined in part by your life expectancy. For a quick reference the typical way that life expectancy and annuity terms interact are:

1. Single life annuities usually offer the highest monthly payouts, because the insurance company's risk is limited to your life expectancy.

2. Single life with refund payout offers you less income, because the insurer faces the obligation to continue paying your beneficiaries if you died before the premium had been paid to you.

It's not just luck or genes

3. 100% joint and survivor entails an even lower monthly payment but ensures your spouse gets the full annuity amount for his or her lifetime, too.

The cost of these policies is directly influenced by your life expectancy, since the insurance company must estimate how long it will be obligated to make payments to you. In an annuity contract with a joint life and survivor benefits, you and your spouse would continue to receive payments after one of you died. So in this case, both your life expectancies come into play in determining the annuity premium or monthly income.

Delaying the first payment

Another way in which life expectancy enters into the annuity equation is deciding how soon you should start taking income payments. With a longevity annuity, the longer you defer those payouts, the bigger they will be. This is because the insurer reduces the likely period of time it will have to keep making monthly payments to you.

As we have demonstrated, your life expectancy has major implications with annuities. To figure out your plan to protect against income uncertainties, start with our life expectancy calculator, then consult our buying guides to learn more about the different types of annuities.

Our instant annuity quote calculator can help you compare annuities side by side so you can identify the best annuity option for your needs and situation. However many years you have left to live, make them as comfortable and carefree as possible by figuring out your retirement income needs today!

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Comments (10)

  1. CV:
    Feb 25, 2016 at 11:35 AM

    If I am a year older will I get more money?

  2. Hersh Stern:
    Feb 25, 2016 at 11:35 AM

    Hi CV-

    I looked up your quote request and I see that you are considering a Period Certain annuity. With a period certain annuity your age does not affect the income. Whether you are 40, 60, or 80 years old, the quotes are the same for a period certain annuity.

    Hersh

  3. Judy:
    Feb 25, 2016 at 11:38 AM

    Your site is most helpful. I turn 73 on July 24th, so I was playing with the calculator to see what I might get at age 72 and 73. The payment went up from $590 to $599. Not sure whether to wait until I turn 73 or not. Interest rates seem to be going down, not up. Such uncertainty these days.

  4. Hersh Stern:
    Feb 25, 2016 at 11:48 AM

    Hi Judy –

    As far as waiting until your next b-day: Some companies will consider you to be 73 when you are within 6 months of July 24th. So that was on January 25 (4 days ago).

    May I draw your attention to the quotation charts you received by email. You’ll find a small numbered footnote following each insurance company name.

    The legend for these footnotes is below the quotation table. I’ve copied the first three footnotes and explained each them here:

    1: Age based on your nearest birthday. These companies consider you to be a year older when you are nearer to your next b-day, which already happened a few days ago. So you’ll income from these companies will not increase as you get closer to or pass your next birthday. In fact, if you’re right about interest rates dropping, waiting will reduce your payout from these companies.

    2: Age based on your last birthday. These companies consider you to be a year older only after you reach your next birthday (on July 24). So you’ll income from these companies will not increase until then.

    3: Age interpolated to the nearest day. These companies interpolate your age every day. They don’t bump up your age when you enter the period that is 6 months closer to your next b-day, nor do they change your payment just because you reached your next b-day (on July 24th). Each day, as you are older, your income is proportionally increased a tiny fraction.

    Hersh

  5. Ana:
    Apr 18, 2016 at 01:50 PM

    What happens to the original price I paid for my annuity?

  6. Hersh Stern:
    Apr 18, 2016 at 01:51 PM

    Hi Ana-

    I can only answer your question here briefly because there many different types of annuities and they each treat your initial payment or premium differently.

    I also saw that you created a quote at our website for an immediate annuity. So I’ll start with that type of annuity. An immediate annuity distributes back to you a portion of your principal (your $40,000) each month. So if you died before the $40,000 had been paid back to you in full, the balance would be returned to your beneficiaries under the “Cash Refund” payment option.

    There also are annuities that return the full $40,000 to you – these are called deferred annuities. You can read more about them here:

    https://www.immediateannuities.com/deferred-annuities/

    Hersh

  7. Jessica:
    Apr 26, 2016 at 02:49 PM

    I have a question about the "Taxable Portion" column in your quotes. For example, if the "monthly" income is $1,339 and the"taxable portion" says $494, is this for the "year" (or) for each month?

  8. Hersh Stern:
    Apr 26, 2016 at 02:49 PM

    Hi Jessica,

    The taxable portion shown is per month.

    How much in taxes you actually owe depends on your tax bracket. Say, for example, that you’re in the 25% bracket. Then referring to the $494 figure you quoted, 25% of $494 would be $124. The $124 is the amount of federal income you owe each month. So if you receive $1,339 a month from the insurance company and pay $124 to Uncle Sam, you will have kept $1,215 of each month’s check. (By the way, $1,215 divided by the initial $1,339, is 90%. That’s the percentage of each monthly payment you keep after taxes.)

    Hersh

  9. Lisa:
    Aug 25, 2016 at 08:12 AM

    Is there a maximum age a person can effect a direct transfer or 1035 exchange?

  10. Hersh Stern:
    Aug 25, 2016 at 08:13 AM

    Hi Lisa-

    There are no age limits in the tax code. However, the “incoming” insurance company may limit the age of the buyer of their annuities. Some companies will not start a new annuity for a buyer older than age 85, for example. Other companies have no such restrictions.

    -Hersh