When creating a financial plan, it’s important to set an endpoint. Each person has their own family history, current health, and expectations for how long they’ll live. That’s why we analyze historical life expectancy rates from birth and look at future projections.

Here’s a chart dating back to 1860 through 2020, showing life expectancy rates from birth. If we treat life expectancy like an investment, it has consistently trended upward with only a few dips. In 1860, people were expected to live an average of 39.4 years. By 2020, that number had doubled to 78.9 years.

Life Expectancy (from birth) in the United States from 1860 to 2020

(Source: Statista)

As life expectancy continues to increase, it places greater emphasis on longevity planning. Noted financial advisor, Ric Edelman, has recently suggested that if you’re alive in 2030, you are likely to live to 100 or even longer. He attributes this to anticipated advancements in public healthcare, medical breakthroughs, and improved lifestyles. However, it is worth noting that projections by official centers have not fully embraced this notion yet.

(Source: US Census Bureau)

According to the chart above, newborns in 2050 are projected to have a life expectancy of 84.7 years. While the trendline remains upward, one wonders if these projections underestimate the potential technological advancements on the horizon.

When formulating a financial plan, it is prudent for clients to adopt conservative estimates, particularly when it comes to longevity. As mentioned earlier, each client’s situation is unique, but planning for an extended lifespan is advisable to avoid financial complications during your golden years, which may extend well into your 100s!

Presented by the Financial Planning Committee of Lake Street, an SEC Registered Investment Adviser

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