There has been a lot of talk about life expectancy assumptions in retirement planning. A life expectancy assumption of 80 compared to 90 is surely going to make a big impact on the success rate of a plan. According to the Social Security Administration, a 65 year old has an average life expectancy of 83 for a man and 85 for a woman. About 1 out of 4 65 year olds see their 90th birthday and 1 out of 10 will see their 95th. Our financial planning programs include automatic life expectancy calculations. Here is information on how the Money Tree Software’s financial planning programs calculate life expectancies.
Silver and TOTAL Planning Suite (Easy Money and Golden Years) use different methods forcalculating the life expectancy value, which are explained below. The programs use IRS life expectancy tables as a basis for the calculated value.
Silver - Big-Picture Planning
Silver uses the single life expectancy table to calculate individual one’s life expectancy for clients over age 55. For clients under age 55, the program uses a set life expectancy of 85. For Ind. 2’s life expectancy, the program adds 5 more years to the value from the single expectancy table to adjust for a joint life expectancy.
View the single life table on IRS Publication 590 (Appendix B. Life Expectancy Tables - Table 1 Single Expectancy.)
TOTAL - In-Depth Planning
TOTAL calculates a higher life expectancy values than Silver. TOTAL uses the Uniform Lifetime to calculate the life expectancy. This table gives the longest life expectancy of all the life expectancy tables, building in longevity risk in the planning projections.
View the Uniform Lifetime Table on IRS Publication 590 (Appendix B. Life Expectancy Tables - Uniform Lifetime Table.)
Don’t forget the calculated life expectancy is easy to overwrite by simply using the alternative life expectancy field!