# Financial Plans: what age is reasonable to plan until?



## Foxx88 (Aug 1, 2019)

Last year I hired a financial planner to do overall planning and retirement planning, after having found myself in a position to potentially retire early. I'm coming up to the end of the first year using this planner's services and so far I'm happy. However, there's one issue I want to discuss with the planner, and that's the outer age limit used for my financial plan, which is one factor that will affect how much monthly income I draw. The age the planner uses for all clients is 110. Yep, 110! At the risk of sounding negative, I don't think I'll live beyond 90 (based on family history) and neither of my parents made it to 85. I had one grandmother who lived to 105. When I tell my friends the planner is basing my financial plan on potentially living to age 110, they say that's ridiculous. I know he's chosen that age to ensure the financial plan outlives any eventuality in life expectancy.

*So the question is: what AGE do people think financial planning should go to? What is reasonable? What is the norm to plan to?* I thought maybe 100 ... one friend said 90. I think 110 is far, far beyond what I'll live to.

Given that most of my retirement income will come from investments (I don't have a pension plan), I certainly have to ensure that my money outlives me, and I want to leave something for my children. I have enough money to retire on comfortably but not so much to live lavishly (not my style anyways, but I do want to travel more than I have in the past and travel isn't cheap). However, my feeling is that the age to which the planner is planning will have a bearing on my sustainable monthly income, and thus how much travelling I can afford. It's important to balance living life to the fullest possible while ensuring I don't run out of money. But age 110 ... my feeling is this is likely 25 years beyond what I'll live, and at a minimum 20 years beyond. Of course, no one has a crystal ball. But the average life expectancy for women in Canada is about 85.


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## AltaRed (Jun 8, 2009)

Lots has been written on this subject with no real consensus. At one time, I believe 90 was the norm because actuarily, few people lived beyond 90. In more recent time, I believe 95 has become the norm, with some stretching it to 100. 110, to me, is not something I would remotely fathom and wouldn't let a FP use.

The quirk in actuarial tables is that the 50% chance of someone living past age X increases as one gets older, e.g 70, simply because the statistics drop out anyone who has died before age 70. Example: So at age 50, there might be a 50/50 chance of living to age 80, but if you get to 70, there might be a 50/50 chance of living to age 90, and at age 85, there might be a 50/50 chance of living to age 95. By age 93 or so, there is a 50/50 chance of living one more year...and that doesn't change thereafter....always remaining at one more year. Anyways... you get the drift.

One perhaps more important point is that our rate of spend starts to drop significantly after age 75 (or 80) because we have less desire/interest to spend money on travel, expensive recreation, etc. How many 85 year olds do you know that are still traveling and doing expensive things? A round of golf now and then and an evening out to the theatre might be it. FPs don't account for spending reductions in later ages. I'd suggest that if an FP doesn't do that, the FP is overstating needs. 

That all said, health is the big factor and slow but increasing disabilities will also require more spend. Maybe it is conservative to say spending goes 'flat' after a certain age. Only you can decide how to fine tune those 80+ factors.

Added: Spouse and I have passed the 70 marker and our rate of spend is quite significant because we are still motivated enough to spend fairly lavishly on travel, recreation and home renos. I am guessing that rate of spend will drop to 75% of what we spend now and perhaps as low as 50% of current spend once in our '80s. Interest and health will be the driving factors, but already we are starting to have less enthusiasm today for the adventurous stuff than we did at age 65.


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## Foxx88 (Aug 1, 2019)

Thanks for your reply AltaRed ... good to hear you think my reticence to plan to age 110 isn't off. All of the scenarios he's given me are "after tax and inflation." I'm hoping he'll run some scenarios for me with different outer age limits (95 and/or 100). I know he won't be comfortable only planning to age 90, and might even tell me to get a different planner if that's only how far I want to plan. Your second paragraph about 50/50 is well noted. 

My planner has definitely suggested that one option is to take a higher income up until age 75 (the age at which he says many people start travelling less) to provide more money for travel before then. It's up to me whether I want to do that or not. However, when I look at the potential scenarios, I don't like the income after 75 since it might not be enough if I ended up in a similar situation as one of my parents. However, if he was planning to 95 or 100 instead of 110, then the income after age 75 could well be enough. I want to ask him what the difference in my income would be before and after age 75 in the various scenarios if we were planning to age 95 or 100. One thing about planning people need to realize is no scenario is correct because there are unknowns, and any planner who tells you they know exactly how it will go is full of it. For one thing, one doesn't know what the returns will be from investments until the end of each year ... and one doesn't know what the returns for the next decade will be until the end of the decade. So from that you can take that I'm not just invested in GICs or term deposits, which would be hard-pressed to even keep up with inflation. It's a whole different ball of wax planning to retire with a pension, than planning to retire based on managing your own investments. And it's even more interesting when markets are mediocre or flat, or there's constant talk of an impending recession. But the latter issues are my worries, not my planner's since when there's a downturn markets rebound and he's planning long-term.

I own a house, which at some point down the road if I live long enough will be sold, which would provide more to invest to create income.

Should also add that, as my FP says, financial plans aren't a static thing ... it's an ongoing process that has to be revisted on a regular basis. I don't think he says that because it's how he makes his money. It's just reality that life is fluid.


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## cainvest (May 1, 2013)

AltaRed said:


> One perhaps more important point is that our rate of spend starts to drop significantly after age 75 (or 80) because we have less desire/interest to spend money on travel, expensive recreation, etc. How many 85 year olds do you know that are still traveling and doing expensive things? A round of golf now and then and an evening out to the theatre might be it. FPs don't account for spending reductions in later ages. I'd suggest that if an FP doesn't do that, the FP is overstating needs.


I have a separate line on my retirement spreadsheet for "spending money", what's left over after all regular expenses are taken out. I reduce my income in the latter years (75+) as my spending habits will likely go down.

It's a tough calculation to do, to many variables, you just make your best guess. My planning goes to 85 years old BUT my house is not included in my retirement funds, that's my safety net.


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## RussT (Jul 11, 2016)

My homemade plan is based on me dying in the next year (not likely, but financially the worst case scenario) and my wife living until 95 (likely, because she has good genes and really takes care of herself). 

If I live longer than planned our assets continue to accumulate. I think I might make it to 85, but that's probably good enough for me. If my wife lives to 100 or even 105, the estate will be a bit smaller than planned.


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## Beaver101 (Nov 14, 2011)

Foxx88 said:


> Thanks for your reply AltaRed ... good to hear you think my reticence to plan to age 110 isn't off. All of the scenarios he's given me are "after tax and inflation." I'm hoping he'll run some scenarios for me with different outer age limits (95 and/or 100). I know he won't be comfortable only planning to age 90, and might even tell me to get a different planner if that's only how far I want to plan. Your second paragraph about 50/50 is well noted.
> 
> My planner has definitely suggested that one option is to take a higher income up until age 75 (the age at which he says many people start travelling less) to provide more money for travel before then. It's up to me whether I want to do that or not.* However, when I look at the potential scenarios, I don't like the income after 75 since it might not be enough if I ended up in a similar situation as one of my parents. However, if he was planning to 95 or 100 instead of 110, then the income after age 75 could well be enough. I want to ask him what the difference in my income would be before and after age 75 in the various scenarios if we were planning to age 95 or 100.* One thing about planning people need to realize is no scenario is correct because there are unknowns, and any planner who tells you they know exactly how it will go is full of it. For one thing, one doesn't know what the returns will be from investments until the end of each year ... and one doesn't know what the returns for the next decade will be until the end of the decade. So from that you can take that I'm not just invested in GICs or term deposits, which would be hard-pressed to even keep up with inflation. It's a whole different ball of wax planning to retire with a pension, than planning to retire based on managing your own investments. *And it's even more interesting when markets are mediocre or flat, or there's constant talk of an impending recession. But the latter issues are my worries, not my planner's since when there's a downturn markets rebound and he's planning long-term*.


 ... sounds like splitting hairs there.

...



> Should also add that, *as my FP says, financial plans aren't a static thing ... it's an ongoing process that has to be revisted on a regular basis. I don't think he says that because it's how he makes his money. It's just reality that life is fluid*.


 ... sorry but how much did you pay for him/her to tell you this (or what you already know)? 

Anyhow, my simple question to your FP - does he/she plan his/her own plan living to age 110 like that for every one of his client (as happy as they would like to hear living that long), using one of his cookie-cutting "planning" tool?


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## Foxx88 (Aug 1, 2019)

Beaver101 said:


> ... sounds like splitting hairs there.
> ... sorry but how much did you pay for him/her to tell you this (or what you already know)?


Your sarcastic question doesn't make sense, since obviously the financial planner provides a detailed financial plan not just a statement that "this is one option." There's a lot of information that goes into a financial plan, and a lot of information provided to me so I can make important decisions .... sustainable income figures for various scenarios. So when I wrote _"My planner has definitely suggested that one option is to take a higher income up until age 75"_ obviously he provided me with variety of scenarios, each with sustainable income figures. One of the reasons I hired him was to determine when I could retire (now ... in #? years) since I found myself in a new situation financially. The other reasons I hired him was to discuss various investment options since I had a LOT of decisions to make. Before you make sarcastic comments about what someone wrote or whether hiring a financial planner is worth the money, consider that they're only posting what's directly relevant to the immediate issue they brought up (age to plan to), and not all the details, including the countless reasons I hired a financial planner, which is about the big, long-term picture. I don't have a pension plan, so I'm responsible for managing my assets so they last at least as long as I do, thus it's very important to get it right so 1) I can retire, and 2) I don't have to go back to work because I didn't plan adequately.

RE: _Anyhow, my simple question to your FP - does he/she plan his/her own plan living to age 110 like that for every one of his client (as happy as they would like to hear living that long), using one of his cookie-cutting "planning" tool?_

Yes, so this will be my point to him: that while planning to age 110 might be fine for his clients who have 5, 10 or 20 millions dollars, since I have much less than that it's likely better to plan for a shorter time period so I don't under spend when I don't have to. I want him to run the numbers for a variety of scenarios and to age 90, 95 and/or 100. Whatever your opinion is of financial planners (mine is a fiduciary RFP and CFP) ... I can't come up with these scenarios myself and nor could I make a decision to retire or not without financial planning. I know a lot of people have negative views of financial planners, however there are good ones out there and I chose mine carefully. He's independent and doesn't sell any investment products and so makes no commissions that way ... he is paid directly by his clients.


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## kcowan (Jul 1, 2010)

When we did the financial plan in 2002, I fussed with longevity. At the time, my expiry date was forecast as 89. However that was with 50% accuracy (i.e. a median) so I analyzed the spread, namely that, while 89 was the 50% likely scenario, it meant that there was an 80% probability of living to 81 and a 20% probability of living to 97. (my Dad lived to 95) Add to that DW is three years longer with a higher probability of living longer and we chose age 100.

That was 17 years ago. The main thing that has changed is health. Like AR says, things change as we get older. For us, the main change has been higher costs of travel: business class air fares, luxury river cruises, high end hotel choices and more expensive travel medical insurance. This latter one has been brutal. It is what we call aging out. Nothing to do with health and claims. Just the insurance companies ensuring their profit margins.

However, the market has exceeded our expectations except in 2008-9, so it is easier to maintain the 100 year (20%) expectation. And that is without any specific consideration for end-of-life care. We have increased gifting.


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## Prairie Guy (Oct 30, 2018)

Projecting to 110 is ridiculous. If you want to retire early then you have to somewhat realistic....and also take into account that your spending beyond fixed expenses is not set in stone. I know several people in their 80's (my parents, aunts, uncles and some of their friends) and virtually all of them slowed down significantly by their mid-70s. They may live well beyond 90 but extensive travel is out along many other things that they used to do.


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## Beaver101 (Nov 14, 2011)

Foxx88 said:


> ... Before you make sarcastic comments about what someone wrote, *consider that they are only posting what's directly relevant to the immediate issue they brought up (age to plan to), and not the entire picture, including the countless reasons I hired a financial planner,* which is about the big, long-term picture. I don't have a pension plan, and I'm responsible for managing my assets so they last at least as long as I do, thus it's very important to get it right.


 ... that's what I'm getting at with the hairs ... how much difference in fundings are there between age 75 and 80, then 80 to 85? when it's the big picture to be looked at. I didn't mean to be sarcastic there but if you see it that way, then I'm sorry. 

Obviously, you're happy with this planner so no further need for me to comment.


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## lonewolf :) (Sep 13, 2016)

I think 110 + is reasonable though would use deferred annuities to get there plus hold some gold.

Stem cells & technology could make 110 the new norm for those with money to travel to Asia. North America has to many restrictions for extending life expectancy with the use of stem cells.


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## Beaver101 (Nov 14, 2011)

lonewolf :) said:


> I think 110 + is reasonable though would use deferred annuities to get there plus hold some gold.


 ... so when do you expect those deferred annuities be purchased?



> Stem cells & technology could make 110 the new norm for those with money to travel to Asia. North America has to many restrictions for extending life expectancy with the use of stem cells.


 ... okay, you got longevity here but what about quality of life?


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## Foxx88 (Aug 1, 2019)

Beaver101 said:


> ... that's what I'm getting at with the hairs ... how much difference in fundings are there between age 75 and 80, then 80 to 85? when it's the big picture to be looked at. I didn't mean to be sarcastic there but if you see it that way, then I'm sorry.
> 
> Obviously, you're happy with this planner so no further need for me to comment.


That's exactly what I want to know ... how much difference there would be in sustainable income under various scenarios if planning for a 10 or 15 year shorter time period than to age 110, which I agree is "ridiculous." So I've asked him if he can provide the long-term scenario analyses to age 95 and age 100. Wait and see what he says. I know he's trying to be incredibly prudent for all his clients, but I also know he's covering his butt in the event one of his clients lives beyond 100. When I started this process he told me what age he plans to and I accepted it because I had so many other decisions to make. However, it's a year later and I've had a chance to process a lot of information so now I want to revisit that ... hopefully he'll provide me with those alternate scenarios. I have no idea how much difference it would make to sustainable income until I see the numbers.


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## cainvest (May 1, 2013)

Foxx88 said:


> However, it's a year later and I've had a chance to process a lot of information so now I want to revisit that ... hopefully he'll provide me with those alternate scenarios. I have no idea how much difference it would make to sustainable income until I see the numbers.


Try not to get to bogged down in the senarios but make sure you're comfortable with your ball park figure. Even a sustained 1% rise (or fall) in expected returns over 20+ years can have a significant impact on your portfolio balance. Same goes for early over-spending, you have to adjust your budget for the latter years to compensate for that.


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## Foxx88 (Aug 1, 2019)

cainvest said:


> Try not to get to bogged down in the senarios but make sure you're comfortable with your ball park figure. Even a sustained 1% rise (or fall) in expected returns over 20+ years can have a significant impact on your portfolio balance. Same goes for early over-spending, you have to adjust your budget for the latter years to compensate for that.


Yep I know that, we've talked about that, and he's shown me scenarios with a difference of 1% between them after tax and inflation. But we don't know what it will be until we get there. I realize it's better not to overspend early on. Still, I wonder what difference it would make to plan to age 95 or 100, versus age 110. Perhaps not much, but would still like to assess.


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## cainvest (May 1, 2013)

Knocking 10-15 years off your end date will be a significant amount.

You can do a quick estimate by looking at your plan, just add up 10-15 years of your budgeted income for those years.
So if you're inflation adjusted income of ~$50k/yr that'll leave you an extra $500k (for 10 years) to spend before the new end date, again, as a quick estimate.


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## AltaRed (Jun 8, 2009)

It is a reasonable request to require your FP to run some representative scenarios based on 95 or 100. Don't need to run both because it is easy enough to interpolate/extrapolate as necessary. No need to get too many results because one gets lost in the trees AND the world changes beyond one's assumptions. Re-running the scenarios every 5 to 10 years is not a bad idea as a reality check. Too many people poo-poo use of a fee-for-service FP but these folks can at least validate what one is thinking or to have observations an individual could miss. It's not a bad second opinion for those who are not sure of themselves.

Another angle to work out yourself is to apply VPW methodology https://www.finiki.org/wiki/Variable_percentage_withdrawal which has been backtested and is essentially comparable to RRIF methodology. It was originally developed for Americans via Bogleheads, but has been adapted to Canada. It is pretty certain your FP has never heard of it and therefore is not about to recommend it. 

The joy of this method is that one's annual withdrawals are based on portfolio performance at the beginning of each year ensuring you do NOT run out of money until age 100. It will actually allow you to spend more money in the early years than conventional linear methods like SWR or SWR adjusted for inflation, or SWR reset each January based on portfolio value at the beginning of each year, but not run out of money until age 100.

The downside is the annual withdrawals will vary with portfolio performance so it is necessary to be flexible with annual spend.

Some will be uncomfortable heading for zero at age 100, but if one also has a home as an asset, then those funds will come into play when the house is sold and can be used to buy an annuity for longevity insurance, or a portion set aside outside the VPW calculation as a reserve (estate residual for heirs).

Added: I am 70 and use VPW methodology as a guidepost for what I can withdraw from my portfolio. I am fortunate that I never run into the annual caps that VPW cranks out, but at the same time has allowed me to increase my spend substantially in my best retirement years.

There is a long multi-year thread on FWF discussing VPW if there is any interest in your spare time. https://www.financialwisdomforum.or...t=117200&sid=4231138af7283972eb06680a72813f65


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## james4beach (Nov 15, 2012)

I've been planning to age 100, but I also use conservative sustainable withdrawal assumptions such as a 3% constant (inflation adjusted) withdrawal assumption.


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## AltaRed (Jun 8, 2009)

james4beach said:


> I've been planning to age 100, but I also use conservative sustainable withdrawal assumptions such as a 3% constant (inflation adjusted) withdrawal assumption.


That is fine if you wish to use that methodology, but you are most likely leaving some spending opportunity on the table depending on age of retirement and asset allocation https://www.finiki.org/wiki/Variable_percentage_withdrawal#VPW_Table With an age of 55 and a 50/50 allocation, you could be spending (including income tax) at 4.2% of the balance of your portfolio on Jan 1 of that year.

Added: I could be spending up to 5.6%. Not likely to do that, but instead, I have the luxury to also include my annual TFSA contribution as a spend item....thereby insuring I continue to fund my TFSA despite being in overall withdrawal. The TFSA will either be a reserve for end-of-life or a legacy.


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## Longtimeago (Aug 8, 2018)

As always, this kind of planning makes the assumption that you are going to 'draw down' from capital. There is however another way and that is to not touch your capital at all but instead live off the income you generate. There is no age limit on how long that can be done for.

The problem for most people is that they cannot generate enough income with the capital they have or through pensions. Someone who has pension income of $100k for example has no need to draw down capital unless they want to live beyond $100k per year in spending. It's called living within your means.

What seems funny to me is that some people do live within their means all their lives and yet when they retire they suddenly switch to a 'live till when I guess I will die' mentality. Retirement is seen as a waiting for an end rather than simply a new time in life that should be treated in the same way as any other. Imagine someone 30 writing, 'what if I don't live to reach 40 and I die with money in my savings account, what a disaster.' Yet when someone writes, 'what if I plan for 110 and only live till age 90, I'll leave money in the bank, what a disaster', we don't see it as equally as stupid a thing to say. Or an even funnier way to put it, 'what if I live too long and run out of money?' I'm trying to imagine waking up one morning and saying, 'oh ****, I've lived too long.' There are people aged 110 who get up each morning and enjoy their day. Probably not in the same way as they did at age 30 or 40 but they enjoy it nevertheless. You're saying, 'I don't want a plan to do that'. 

Interestingly, people who end up with nothing but government pension income don't have any problem. They have an income and they learn to live within in. When does it end, not until the day they die, WHENEVER that may be.

It seems to me there is something very fundamentally wrong with this 'I need to know when I will die, so I can plan' picture.


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## Beaver101 (Nov 14, 2011)

^


> Or an even funnier way to put it, 'what if I live too long and run out of money?' I'm trying to imagine waking up one morning and saying, 'oh ****, I've lived too long.' *There are people aged 110 who get up each morning and enjoy their day. *Probably not in the same way as they did at age 30 or 40 but they enjoy it nevertheless. You're saying, 'I don't want a plan to do that'.


 ... I wonder who that will be? 

OTOH, you're saying "I want a plan for that as I'm going to live to 100+" ... get real. No wonder financial planners love folks like you, selling fantasies.


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## Retired Peasant (Apr 22, 2013)

Foxx88 said:


> the planner is basing my financial plan on potentially living to age 110
> ...and I want to leave something for my children. ...


I'm wondering if that's his way of leaving something for your estate?


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## cainvest (May 1, 2013)

Longtimeago said:


> As always, this kind of planning makes the assumption that you are going to 'draw down' from capital. There is however another way and that is to not touch your capital at all but instead live off the income you generate. There is no age limit on how long that can be done for.


Sure that's an option but for most people either they don't have enough capital to generate income for their desired lifestyle and/or they don't want to limit their lifestyle for no good reason. The saved money is there to be spent, albeit, within an estimated budget over time.


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## james4beach (Nov 15, 2012)

Beaver101 said:


> ^ ... I wonder who that will be?
> 
> OTOH, you're saying "I want a plan for that as I'm going to live to 100+" ... get real. No wonder financial planners love folks like you, selling fantasies.


A man in my old swimming group was still getting in the pool at 104. And my own grandmother still swam in the ocean into her 90s.

https://www.cbc.ca/news/canada/mani...nipeg-swimming-champion-passes-away-1.2825576

As a side note here... hard to tell correlation/causation but there are probably worse things you can do than swimming regularly. Speaking of which, I'm off to the pool to swim laps.


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## AltaRed (Jun 8, 2009)

LTA, it has nothing to do with a 'need to know when I will die'. One's best before date is simply a planning assumption. Few people will have the capital resources to simply live off investment income, nor does that make sense long term. The capital will jut continue to appreciate with markets and one dies the wealthiest person in the funeral home. What is the point in that?

I have no interest in having more capital left the day I die than I do now so it makes no sense whatsoever to unnecessarily 'horde' resources when there is no need to do so. However, that also doesn't automatically imply spending like crazy and running out of money either. Financial planning tools take an objective look at a retirement period and spending rate, without just throwing a dart at the board. How one actually then lives their life can be correlated back to planning outcomes.

Everyone has an anecdote on a 100+ year old friend or relative. StatsCan puts it into reality. https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1710000501 

Reality is only 0.03% of the country's population is 100 years of age or more and only 0.6% of those now aged 70-74. I am more than 99% sure I am not going to see 100.....and for what it is worth, I have no interest in doing so.


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## Userkare (Nov 17, 2014)

My spreadsheet goes to age 100. No reason, just went nuts with cut-n-paste rows. 

I calculated the drawdown of RRIF to run out at age 90. If I'm still alive by then, I'm sure my expenses will be minimal. After all, we're soon gonna have free drugs ( I don't need any yet ), free glasses ( I don't need any yet ), and free dental ( just 6 mos cleaning now ). 

What else does a 90 y/o spend money on?


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## Beaver101 (Nov 14, 2011)

Retired Peasant said:


> I'm wondering if that's his way of leaving something for your estate?


 ... versus the upside of gifting his assets to kids whilst alive? Did the f.p. not make a suggestion?


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## Beaver101 (Nov 14, 2011)

james4beach said:


> A man in my old swimming group was still getting in the pool at 104. And my own grandmother still swam in the ocean into her 90s.
> 
> https://www.cbc.ca/news/canada/mani...nipeg-swimming-champion-passes-away-1.2825576
> 
> As a side note here... hard to tell correlation/causation but there are probably worse things you can do than swimming regularly. Speaking of which, I'm off to the pool to swim laps.


 ... I think ALTRED said it best in his post #25, along with the StatsCan link.


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## james4beach (Nov 15, 2012)

Life is pretty random. And what happens if you do happen to become one of those 102 years olds?

If there's one thing worse than being 102, it's probably being 102 and having $0 left.


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## cainvest (May 1, 2013)

james4beach said:


> Life is pretty random. And what happens if you do happen to become one of those 102 years olds?
> 
> If there's one thing worse than being 102, it's probably being 102 and having $0 left.


That's assuming you even realize you are 102 ... I know many over 85 that are oblivious to their surroundings.


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## Beaver101 (Nov 14, 2011)

james4beach said:


> Life is pretty random. And what happens if you do happen to become one of those 102 years olds?
> 
> If there's one thing worse than being 102, it's probably being 102 and having $0 left.


 ... so what's the use of being 110 year old, lost of all faculties but with a trillion dollars in the bank? Richest person in the graveyard ... eventually?


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## like_to_retire (Oct 9, 2016)

LTA made a lot of great points in his post such as:

_________________________

_What seems funny to me is that some people do live within their means all their lives and yet when they retire they suddenly switch to a 'live till when I guess I will die' mentality. 

Imagine someone 30 writing, 'what if I don't live to reach 40 and I die with money in my savings account, what a disaster.'

'what if I plan for 110 and only live till age 90, I'll leave money in the bank, what a disaster'

'what if I live too long and run out of money?' I'm trying to imagine waking up one morning and saying, 'oh ****, I've lived too long.'_

_________________________

These are the same thoughts I had through this thread, but the rebuttals to these ideas that others have posted are also quite good.

No matter what, it ends badly. 

Everyone's situation is different, so there's no right answer to the OP's original question.

ltr


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## AltaRed (Jun 8, 2009)

james4beach said:


> Life is pretty random. And what happens if you do happen to become one of those 102 years olds?
> 
> If there's one thing worse than being 102, it's probably being 102 and having $0 left.


That won't be the case. There will be CPP, OAS and even GIS. At that age, one won't even know what is coming in or going out. Besides, you are assuming inflexible withdrawals. There is plenty of time for one's POA to make adjustments* passing through 90 when one won't be spending any money of consequence anyway. Your 3% will go mostly unused.

* In the case of the VPW table https://www.finiki.org/wiki/Variable_percentage_withdrawal#VPW_Table, just start capping withdrawals at 10-12% as one hits 90 rather than ramping up exponentially in those last years.


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## Longtimeago (Aug 8, 2018)

AltaRed said:


> LTA, it has nothing to do with a 'need to know when I will die'. One's best before date is simply a planning assumption. Few people will have the capital resources to simply live off investment income, nor does that make sense long term. The capital will jut continue to appreciate with markets and one dies the wealthiest person in the funeral home. What is the point in that?
> 
> I have no interest in having more capital left the day I die than I do now so it makes no sense whatsoever to unnecessarily 'horde' resources when there is no need to do so. However, that also doesn't automatically imply spending like crazy and running out of money either. Financial planning tools take an objective look at a retirement period and spending rate, without just throwing a dart at the board. How one actually then lives their life can be correlated back to planning outcomes.
> 
> ...


The elephant in the room AltaRed is that most people don't have enough money to fund retirement without spending their capital. I don't care how much capital I leave behind me, I just care about having enough income to do what I want to do till I die. 

Most people retire with some kind of an income from pensions or whatever but that income is not as much as they would like it to be. It's all about human nature and is the same reason why most people live in debt, they want more than they can afford. But there are SOME people for whom that generalization does not hold true. There actually are people who earn more money than they find they need to enjoy their life. 

My wife and I live very happily on less than 2/3rds of our income. That income is without touching capital. So capital just sits there so to speak. So what? Just as you say you have no interest in having more capital left the day you die and that 'hording' it makes no sense, I agree. I don't horde it, I don't care how much I leave, I'm just like you in that regard. The difference is I still don't need it all and so it will just sit and build and I'll continue to not care if it does or not, as long as I have more income than I need to do as I want.

I don't need any 'planning assumption' as to when I will die. You call it a 'simple' planning assumption. Really? I don't find anything about when I will die, simple. I don't want to guess as to when it will be, I sure as heck don't want to plan when it will be or I'll go broke, etc. 

There is no point to dying the wealthiest person in the funeral home, now what is the point to dying the poorest person in the funeral home. Or the point to dying, the day before you go broke and become the poorest? There is no point to any of it, why pick on their being no point to dying with money left over? What is WRONG with dying with money left over? Someone will get it even if it is Revenue Canada if you have no heirs. It won't go to waste, someone will use it.

One thing I know, I will not die the poorest in the funeral home. Someone who outlives their 'simple planning assumption' won't be saying that though will they? So which is the stupid way to do things? Live on less than you earn or plan on when you will die? Because one thing is for sure, you may not expect to live till you are 100 and may be 99% sure of that but what if you DO and you went broke the day before your birthday? Oops.

To me it's all about the real question. How much is enough income? If you have that, there is no need to bother spending any time, thought or effort on planning anything except how you want to spend it. Most people though can't answer that question of how much is enough income. The only word they know is MORE.


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## kcowan (Jul 1, 2010)

AltaRed said:


> LTA, it has nothing to do with a 'need to know when I will die'. One's best before date is simply a planning assumption. Few people will have the capital resources to simply live off investment income, nor does that make sense long term. The capital will jut continue to appreciate with markets and one dies the wealthiest person in the funeral home. What is the point in that?





Beaver101 said:


> ... I think ALTRED said it best in his post #25, along with the StatsCan link.


I think LTA does not get it. His recommnedations would lead you to the big stash and no charitable/intergenerational donations when you pass on.


like_to_retire said:


> LTA made a lot of great points in his post such as:_________________________
> 
> _What seems funny to me is that some people do live within their means all their lives and yet when they retire they suddenly switch to a 'live till when I guess I will die' mentality. _________________________
> 
> ...


_But the FP did address the situation that many FPs do not. I will give him that. But I think he missed the conversation that such a plan should engender. That is why OP is here._


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## Beaver101 (Nov 14, 2011)

I would be interested to see/hear what financial planners actually use for themselves in their projections. And do they follow through their own advice.


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## AltaRed (Jun 8, 2009)

Longtimeago said:


> My wife and I live very happily on less than 2/3rds of our income. That income is without touching capital. So capital just sits there so to speak. So what? Just as you say you have no interest in having more capital left the day you die and that 'hording' it makes no sense, I agree. I don't horde it, I don't care how much I leave, I'm just like you in that regard. The difference is I still don't need it all and so it will just sit and build and I'll continue to not care if it does or not, as long as I have more income than I need to do as I want.


This thread has to do with the OP and best I can tell, the OP is not in a position (nor desire) to just live on income. For the purpose of this thread, it does not matter one iota to the OP what you or I would do.


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## Foxx88 (Aug 1, 2019)

AltaRed ... thanks very much for that information ... I'll read up on it when I have time. Today turned out to be nutty.

RE:


james4beach said:


> As a side note here... hard to tell correlation/causation but there are probably worse things you can do than swimming regularly. Speaking of which, I'm off to the pool to swim laps.


I'm a big swimmer too.


As for someone else's response:


Longtimeago said:


> As always, this kind of planning makes the assumption that you are going to 'draw down' from capital. There is however another way and that is to not touch your capital at all but instead live off the income you generate. There is no age limit on how long that can be done for.
> 
> The problem for most people is that they cannot generate enough income with the capital they have or through pensions. Someone who has pension income of $100k for example has no need to draw down capital unless they want to live beyond $100k per year in spending. It's called living within your means.
> 
> ...


Wow LTA, if by _"you're saying ..."_ you are referring to me, you sure are making a lot of assumptions about what I'm thinking, which isn't actually what you suggest I'm thinking. What I'm thinking is I want to make the most of the healthiest years I have left, so I don't avoid doing some things (i.e. related to amount of travel) because I think I can't afford it, if in fact I can afford it. I WILL have to draw down on the capital. If I had triple the money I have, it wouldn't matter what age I was planning to because then I'd have more than I could ever spend. So NO LTA I'm NOT saying _" ...'I don't want a plan to do that,"_ even if you think or want to suggest I am. I'm not sure about even posting on this forum if people here make so many assumptions and try to put words in other people's mouths and thoughts in other people's brains. And NO, I also never said "_I need to know when I will die_." lol No one can possibly know that. What I'm saying it's, it's unlikely I'll live to 110, based on family history. There's a big difference between what I'm thinking, and your extensive suggestions (assumptions) about what I'm thinking.

RE:


AltaRed said:


> LTA, it has nothing to do with a 'need to know when I will die'. One's best before date is simply a planning assumption. Few people will have the capital resources to simply live off investment income, nor does that make sense long term. The capital will jut continue to appreciate with markets and one dies the wealthiest person in the funeral home. What is the point in that? ....
> 
> Everyone has an anecdote on a 100+ year old friend or relative. StatsCan puts it into reality. https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1710000501
> 
> Reality is only 0.03% of the country's population is 100 years of age or more and only 0.6% of those now aged 70-74. I am more than 99% sure I am not going to see 100.....and for what it is worth, I have no interest in doing so.


Exactly. I'm just trying to decide what's a realistic age to plan to. LTA is basically mocking me for considering reducing the outer age limit for the financial plan, yet most people think planning to age 110 is "ridiculous" (the word most people use when I mention that to them.) 

I'm still reading responses ... and trying to reply in one post, thus I keep editing this.



Userkare said:


> What else does a 90 y/o spend money on?


One of my parents was in private assisted living the last two years of life, and it was very (VERY) expensive ... more than living in the mortgage-free house.



Beaver101 said:


> ... versus the upside of gifting his assets to kids whilst alive? Did the f.p. not make a suggestion?


I wouldn't be able to retire if I gifted a significant amount of money to my children during my life, other than a few thousand dollars here and there, unless I have a streak of spectacular returns. Though, the financial planner did ask me at the outset of this process if I planned to gift anything and, if so, when. It's very early days ... far too early to consider gifting money that enables me to retire. It's sobering how much money is actually necessary to generate a modest retirement income while at the same time investing prudently for reasonable returns without high risk.



Longtimeago said:


> My wife and I live very happily on less than 2/3rds of our income. That income is without touching capital. So capital just sits there so to speak. So what? Just as you say you have no interest in having more capital left the day you die and that 'hording' it makes no sense, I agree. I don't horde it, I don't care how much I leave, I'm just like you in that regard. The difference is I still don't need it all and so it will just sit and build and I'll continue to not care if it does or not, as long as I have more income than I need to do as I want.


That's great. Though your income might be high so it might be easier for you to live on 2/3 of your income. Someone else's entire income might be less than 2/3 of your income. Anyways, I have zero debt and plan to keep it that way, thus the planning. I would think people here would think it's smart/prudent to hire a financial planner in my situation (no pension, managing my own retirement fund without extensive knowledge of investing.) I sought outside advice to develop as realistic a financial plan as possible, while recognizing there are unknowns. The age we might live to is one of those unknowns.



Longtimeago said:


> I don't need any 'planning assumption' as to when I will die. You call it a 'simple' planning assumption. Really? I don't find anything about when I will die, simple. I don't want to guess as to when it will be, I sure as heck don't want to plan when it will be or I'll go broke, etc.


IF you have so much money that you don't need to make planning assumptions because you know you have so much money that you'll never run out, then that's good for you. However, some people may have a more modest amount of money to retire on, but an amount that requires more planning to meet their goals.

Lastly: 
I guess this is why they often say to avoid talking about religion, politics, and money. It's obviously contentious. Reading everyone's responses was interesting, though wish people wouldn't make assumptions what someone is thinking by extrapolating. One thing doesn't necessarily mean another. 

Have a good evening


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## AltaRed (Jun 8, 2009)

LTA is best ignored. What he can or wants to do has no relevance to your specific situation. 

I do suggest you take a good look at VPW withdrawal methodology. You can pick your start date (age) for withdrawal and your preferred asset allocation. and then trial and error beginning sums to get an idea of what size you want/need your nest egg to be. VPW methodology will always allow you to start spending more money than a very rigid SWR methodology, whether indexed for inflation or not, or whether re-calibrating the portfolio value at the beginning of each year or not. And remember, you don't HAVE to spend the amounts VPW gives you. These are the maximum amounts to be withdrawn.


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## ian (Jun 18, 2016)

Keep in mind that this is a plan. Circumstances change over time. I started planning in my early 50's. Running the numbers on my own program and doing the whatifs and tax scenerios.

We have changed the plan multiple times, even since early retirement. Why? Lifestyle choices, ROR on our assets, spending...whatever. Even some health issues. Like others I took the plan out to 90. Perhaps in five years I might take it to 95 or perhaps drop it down to 75 for one us. One thing for certain...I do not want to be the richest person in the old folks home wishing that we had done this or that in retirement whilst we had the health, the inclination, and the money. Plan your retirement but don't plan it away.

Be flexible and acknowledge that changes in your life will necessitate changes in your financial plan. AltaRed certainly has the right mindset for this. Practical, Flexible, Realistic.


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## Foxx88 (Aug 1, 2019)

AltaRed said:


> I do suggest you take a good look at VPW withdrawal methodology.


I'll take a look at it at some point.




ian said:


> Keep in mind that this is a plan. Circumstances change over time. I started planning in my early 50's. Running the numbers on my own program and doing the whatifs and tax scenerios.
> 
> We have changed the plan multiple times, even since early retirement. Why? Lifestyle choices, ROR on our assets, spending...whatever. Even some health issues. Like others I took the plan out to 90. Perhaps in five years I might take it to 95 or perhaps drop it down to 75 for one us. One thing for certain...I do not want to be the richest person in the old folks home wishing that we had done this or that in retirement whilst we had the health, the inclination, and the money. Plan your retirement but don't plan it away.
> 
> Be flexible and acknowledge that changes in your life will necessitate changes in your financial plan. AltaRed certainly has the right mindset for this. Practical, Flexible, Realistic.


You're right, financial planning isn't static, it's an ongoing process since as you say circumstance or priorities can change. That's a point the planner made at the outset. One can plan without planning one's life away. I meet with the financial planner quarterly now that I've made some major decisions, including where and how to invest. In between those meetings there's no need to discuss it. I have an upcoming meeting, which prompted this question about what age is realistic to plan until ... I put it on the meeting agenda. 

So LTA ... you can mock me for "wanting to know when I'm going to die" (which obviously I don't). I'm just exploring a point to discuss with my planner prior to our next meeting.


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## Longtimeago (Aug 8, 2018)

Foxx88 said:


> I'll take a look at it at some point.
> 
> 
> 
> ...


I have no interest in 'mocking' you Foxx88. I am just trying to introduce a different viewpoint for you to consider.

I believe in learning how to be content with what you have. Contentment is after all the real goal. I can travel on $1000 a day or $100 a day, both will meet my need to travel and spending more doing so will not change the amount of happiness or contentment it brings me. If I happen to have $1000 to spend, that's fine, I can spend all or part of that as I wish. It is when someone only has $100 to spend that it becomes important for them to figure out what it is that actually matters, the travel, not the amount spent doing it.

The basic assumption of drawing down capital is that the person does not have enough without doing that. I disagree with that assumption. They simply haven't figured out how to do it on what they do have. Travel is actually a good example as it is something you can do on almost any amount of money you have and still get the same amount of happiness out of doing it.


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## AltaRed (Jun 8, 2009)

Spending down capital in retirement is what one saved and invested all those years to eventually do. 

Whether that spending is drawn strictly from investment income, or investment income plus invested capital, or pension annuity, it is all capital. Whether one has a portfolio that has 0% distribution yield, 3% yield, or 5% yield during withdrawal is not relevant. They are not different things. It is simply an investment decision on how one gets and draws on their Total Return. One still draws on 'capital' at some percentage rate, e.g. VPW, 4% SWR, etc. Financial plans provide guidance.


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## like_to_retire (Oct 9, 2016)

AltaRed said:


> Spending down capital in retirement is what one saved and invested all those years to eventually do.
> 
> Whether that spending is drawn strictly from investment income, or investment income plus invested capital, or pension annuity, it is all capital. Whether one has a portfolio that has 0% distribution yield, 3% yield, or 5% yield during withdrawal is not relevant. They are not different things. It is simply an investment decision on how one gets and draws on their Total Return. One still draws on 'capital' at some percentage rate, e.g. VPW, 4% SWR, etc. Financial plans provide guidance.


Don't you feel there's merit to the idea that it's better to have money left over upon death (regardless how much or little) than running out of money at an age when you are ill equipped to defend yourself?

This is why I feel the age 110 is a wise choice to use in plans to decide how much to spend. You have to pick an age you know hands-down you won't reach. You pick 90 and you live to 95 - that's a bad situation. Pick 110 and you live to 95 - so you have a little left over. Which condition is worse?

ltr


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## AltaRed (Jun 8, 2009)

I don't advocate running out of money by age X in any financial plan. We will all want money at the end, either as insurance against the last 12-24 months of expensive critical care, or a legacy. If I recall the first post correctly, I believe the OP would like to leave a legacy of sorts too, the amount of which is a balance between a wish and how one wants to live their retirement. But since there is only 0.6% chance all those alive in the 70-74 age group today will be alive at 100+, it becomes a stretch for most people to consider anything beyond 100.

If you want that insurance of a large residual sum, and you have a boat load of assets that allows you to live to 125 even, then it is a no brainer to be ultra conservative in your financial plan. The vast majority of people, perhaps 95% of them, don't have the luxury of ultra-conservatism without compromising the enjoyment of their best retirement years. It is going to be a balance of enjoyment vs the 0.6% odds of exceeding 100 years of age. 

Each of us will make that decision, but even then, no financial plan is embedded in concrete. Reviews and adjustments every 5 years is not a bad idea for everyone. It may well allow for more luxury spend, or more gifting while alive, or a need to button down the hatches a bit for the next 5 years. Everyone has to run their plan according to their comfort levels.


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## ian (Jun 18, 2016)

Spending down capital and keeping enough capital on hand as end of life approaches are not mutually exclusive.


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## AltaRed (Jun 8, 2009)

ian said:


> Spending down capital and keeping enough capital on hand as end of life approaches are not mutually exclusive.


Further, spending down capital is often misinterpreted. All $$ are capital, whether invested capital or investment income. Some choose to have a very low yielding portfolio while others want high(er) yield. Total return may be exactly the same. I know of people who have portfolio yields <2% and would prefer 0%, while others here probably want 4-5% yield. I prefer something closer to 3% yield. I think broad market yield is likely closer to 2%.


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## Mechanic (Oct 29, 2013)

I asked a couple of planners what their fees were and decided I didn't want to give them that kind of salary for what I would get. So, I just do my own and do a NW every 6mths or so and see where we are at. It hasn't changed much in the last 4-5yrs so the income I generate from investments, trades etc, although I would like to see a bit more, is holding it's own. At some point, as I lose interest/focus, I can see hiring a planner. Everyone has different ideas and plans etc so there is no cookie cutter plan anyway. Retiring after I turned 55 was a good choice for me, I love being retired.


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## like_to_retire (Oct 9, 2016)

AltaRed said:


> I don't advocate running out of money by age X in any financial plan. We will all want money at the end, either as insurance against the last 12-24 months of expensive critical care, or a legacy. If I recall the first post correctly, I believe the OP would like to leave a legacy of sorts too, the amount of which is a balance between a wish and how one wants to live their retirement. But since there is only 0.6% chance all those alive in the 70-74 age group today will be alive at 100+, it becomes a stretch for most people to consider anything beyond 100.
> 
> If you want that insurance of a large residual sum, and you have a boat load of assets that allows you to live to 125 even, then it is a no brainer to be ultra conservative in your financial plan. The vast majority of people, perhaps 95% of them, don't have the luxury of ultra-conservatism without compromising the enjoyment of their best retirement years. It is going to be a balance of enjoyment vs the 0.6% odds of exceeding 100 years of age.
> 
> Each of us will make that decision, but even then, no financial plan is embedded in concrete. Reviews and adjustments every 5 years is not a bad idea for everyone. It may well allow for more luxury spend, or more gifting while alive, or a need to button down the hatches a bit for the next 5 years. Everyone has to run their plan according to their comfort levels.


Yeah, good thoughts. So I suppose like everything else in investing it's a compromise between risk and return. 

People can reduce the risk in this situation to basically zero if an age of 110 is chosen, but then must accept living on less each year. 

Or they can then begin dialing down that age and start adding the risk that they'll outlive their savings, but they will be able to spend more each year.

ltr


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## james4beach (Nov 15, 2012)

This is an interesting problem about how to manage capital into those very old years. It's just about impossible to run projections like this.

Can insurance / annuities fill this need? It seems like the kind of situation where you want insurance (pooled risk), since it's just a lottery who makes it to those ages.


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## like_to_retire (Oct 9, 2016)

james4beach said:


> This is an interesting problem about how to manage capital into those very old years. It's just about impossible to run projections like this.
> 
> Can insurance / annuities fill this need? It seems like the kind of situation where you want insurance (pooled risk), since it's just a lottery who makes it to those ages.


I think a lot of people do purchase annuities just to reduce this risk of guessing when they'll die.

ltr


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## Foxx88 (Aug 1, 2019)

james4beach said:


> This is an interesting problem about how to manage capital into those very old years. It's just about impossible to run projections like this.
> 
> Can insurance / annuities fill this need? It seems like the kind of situation where you want insurance (pooled risk), since it's just a lottery who makes it to those ages.


Who wants to hand over their capital to an insurance company.? When the owner of the annuity dies and/or their beneficiary dies (depending on the annuity) any remaining capital doesn't go to the estate. You've given control of your capital to an insurance company. It's a strange kind of investment vehicle and one I wouldn't consider, or rather ruled out very quickly.



AltaRed said:


> I don't advocate running out of money by age X in any financial plan. We will all want money at the end, either as insurance against the last 12-24 months of expensive critical care, or a legacy. If I recall the first post correctly, I believe the OP would like to leave a legacy of sorts too, the amount of which is a balance between a wish and how one wants to live their retirement. But since there is only 0.6% chance all those alive in the 70-74 age group today will be alive at 100+, it becomes a stretch for most people to consider anything beyond 100.
> 
> If you want that insurance of a large residual sum, and you have a boat load of assets that allows you to live to 125 even, then it is a no brainer to be ultra conservative in your financial plan. The vast majority of people, perhaps 95% of them, don't have the luxury of ultra-conservatism without compromising the enjoyment of their best retirement years. It is going to be a balance of enjoyment vs the 0.6% odds of exceeding 100 years of age.
> 
> Each of us will make that decision, but even then, no financial plan is embedded in concrete. Reviews and adjustments every 5 years is not a bad idea for everyone. It may well allow for more luxury spend, or more gifting while alive, or a need to button down the hatches a bit for the next 5 years. Everyone has to run their plan according to their comfort levels.


Your post totally nails it AltaRed. Thanks.



ian said:


> Spending down capital and keeping enough capital on hand as end of life approaches are not mutually exclusive.


Exactly Ian.



like_to_retire said:


> Don't you feel there's merit to the idea that it's better to have money left over upon death (regardless how much or little) than running out of money at an age when you are ill equipped to defend yourself?
> 
> This is why I feel the age 110 is a wise choice to use in plans to decide how much to spend. You have to pick an age you know hands-down you won't reach. You pick 90 and you live to 95 - that's a bad situation. Pick 110 and you live to 95 - so you have a little left over. Which condition is worse?
> 
> ltr


It's hard to have a sensible discussions based on extremes. It's not one or the other, as you seem to suggest above LTR. OF COURSE, I'll be planning to have my investments outlive me. As for LTA and his thoughts on being content with what one has ... I AM content with what I have, I'm just being prudent and exploring the best way to manage it. There seem to be people here who like to misconstrue and extrapolate what others post and put their own spin on it, totally misinterpreting what other people are thinking or saying.


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## AltaRed (Jun 8, 2009)

There is rationale to buying an annuity with all, some, of the house proceeds at age 80. It provides the longevity insurance one fears about outliving one's money. 

The actuarial assumption at age 80 probably is about age 93-95 so a minimum 10 year guarantee minimizes leaving not much money on the table dieing early, and living beyond that is a plus. Point being there is time to adjust one's plans at age 80 or so.

Added: You can't have your cake and icing all the time. About age 80 or so, you might feel differently. Don't be so quick to rule things out.


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## like_to_retire (Oct 9, 2016)

Foxx88 said:


> Who wants to hand over their capital to an insurance company.? When the owner of the annuity dies and/or their beneficiary dies (depending on the annuity) any remaining capital doesn't go to the estate. You've given control of your capital to an insurance company..


Well sure, it's a gamble just like anything else in investing. You die the day after starting the annuity and you lose. You live way longer than expected, and you're the winner. Simple as that.

No one puts all their money in an annuity, but they certainly have their place for those that would be in trouble of outliving their capital. It's a way of hedging your bets. Keep an open mind. Look at every possibility.

ltr


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## Foxx88 (Aug 1, 2019)

like_to_retire said:


> Well sure, it's a gamble just like anything else in investing. You die the day after starting the annuity and you lose. You live way longer than expected, and you're the winner. Simple as that.
> 
> No one puts all their money in an annuity, but they certainly have their place for those that would be in trouble of outliving their capital. It's a way of hedging your bets. Keep an open mind. Look at every possibility.
> 
> ltr


I'd rather leave any money left to my children rather than an insurance company. There must be a lot of cases the insurance company is laughing all the way to the bank.


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## cainvest (May 1, 2013)

Foxx88 said:


> I'd rather leave any money left to my children rather than an insurance company.


That's another safety net that almost everyone doesn't want to use ... their kids. I pretty sure all of us don't want to burden out kids with these financial matters, heck they might be burdered already with our failing health related issues and/or finding a home or care for us.


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## Foxx88 (Aug 1, 2019)

Foxx88 said:


> I'd rather leave any money left to my children rather than an insurance company. There must be a lot of cases the insurance company is laughing all the way to the bank.





cainvest said:


> That's another safety net that almost everyone doesn't want to use ... their kids. I pretty sure all of us don't want to burden out kids with these financial matters, heck they might be burdered already with our failing health related issues and/or finding a home or care for us.


Saying I'd rather leave money to my children than an insurance company is the opposite end of the spectrum than "burdening" ones children. Not sure how you got from what I said to that. If I leave money to my children, that's not burdening them.

As for the statement: "_heck they might be burdered already with our failing health related issues and/or finding a home or care for us."_

It's a fact of life that when one's parents age, more time and energy is required of the younger generation ... I've been there. You do whatever is necessary to ensure they have the best care they can have and to make the most of time left. You sit by their bed more (in hospital, long-term care, or assisted living), you miss more work, you drive long-distances or take a train or fly if necessary, you drop things and rush off when there's a crisis ... whatever is necessary and whatever you're capable of doing for them, you do it. And when they're gone, you have no regrets.


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## cainvest (May 1, 2013)

Foxx88 said:


> Saying I'd rather leave money to my children than an insurance company is the opposite end of the spectrum than "burdening" ones children. Not sure how you got from what I said to that. If I leave money to my children, that's not burdening them.


I was just adding another point since you mentioned one's children ... nothing more than that.

And yup, I would imagine many of us close to retirement have been "care givers" for our parents.


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## Userkare (Nov 17, 2014)

ian said:


> Spending down capital and keeping enough capital on hand as end of life approaches are not mutually exclusive.


Exactly! I said upthread that I had spreadsheeted the drawdown of my RIF investments to run out at age 90. There still should be plenty in non-registered accounts after that. 

Income does not equal wealth; one can have income in lowest tax bracket and still have lots of money on hand to spend.


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## like_to_retire (Oct 9, 2016)

Foxx88 said:


> I'm just trying to decide what's a realistic age to plan to. LTA is basically mocking me for considering reducing the outer age limit for the financial plan, yet most people think planning to age 110 is "ridiculous"





Foxx88 said:


> Saying I'd rather leave money to my children than an insurance company is the opposite end of the spectrum than "burdening" ones children. Not sure how you got from what I said to that. If I leave money to my children, that's not burdening them.
> 
> As for the statement: "_heck they might be burdered already with our failing health related issues and/or finding a home or care for us."............_


Makes me wonder why you would ask for opinions on a forum when every opinion on this thread that doesn't agree with you seems to be an affront.

You sure seem to have it all worked out, and so for myself, I'll leave no further comments. You've got this already. Go Foxx88...........

ltr


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## AltaRed (Jun 8, 2009)

like_to_retire said:


> Makes me wonder why you would ask for opinions on a forum when every opinion on this thread that doesn't agree with you seems to be an affront.
> 
> You sure seem to have it all worked out, and so for myself, I'll leave no further comments. You've got this already. Go Foxx88...........
> 
> ltr


+1


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## Foxx88 (Aug 1, 2019)

Actually didn't take it as an affront ... was just responding to the previous comments. No one has it all worked out. Anyways, my question at the outset was what do people think about planning to age 110 versus a shorter time period and it's been a useful discussion. No problem with different opinions and I welcome them. It's the sarcasm and mockery of one or two people I don't welcome ... it's possible to discuss things like adults without that, but some people on the internet don't treat other people on the internet like human beings (that's what affronts me).

As for annuities, someone else brought that topic up, and since they did I responded why why I'm not interested in them, at least not right now. That isn't being "affronted" ... it's addressing their post. So don't be affronted by thinking I'm affronted by different opinions when I'm not.


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## AltaRed (Jun 8, 2009)

Foxx88 said:


> I'd rather leave any money left to my children rather than an insurance company. There must be a lot of cases the insurance company is laughing all the way to the bank.


It was this comment that soured some views. Surely you know that insurance companies work with actuarially determined data. Die before age you are supposed to die and the lifeco wins. Live longer than when you are supposed to die and you win. Of course, there is a profit element involved too, which is what makes DB pension annuities a better deal for pensioners than profit oriented lifeco annuities. There is a place (and time) to run a financial plan to perhaps 90 or 95, but have some of one's assets in longevity insurance if one lives to 100 and beyond. The combination is better than one might think at first blush.

I won't be buying any such annuity because I have the resources to fund my life however long it goes, but not many have that luxury. Financial plans are very situational AND personal. There is no single right answer.


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## kcowan (Jul 1, 2010)

Longtimeago said:


> The basic assumption of drawing down capital is that the person does not have enough without doing that. I disagree with that assumption. They simply haven't figured out how to do it on what they do have. Travel is actually a good example as it is something you can do on almost any amount of money you have and still get the same amount of happiness out of doing it.


You are just demonstrating (repeatedly) that you do not support living out your last dollar. That is a valid strategy. It just does not belong in this thread.


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## Foxx88 (Aug 1, 2019)

Foxx88 said:


> I'd rather leave any money left to my children rather than an insurance company. There must be a lot of cases the insurance company is laughing all the way to the bank.





AltaRed said:


> It was this comment that soured some views. Surely you know that insurance companies work with actuarially determined data. Die before age you are supposed to die and the lifeco wins. Live longer than when you are supposed to die and you win. Of course, there is a profit element involved too, which is what makes DB pension annuities a better deal for pensioners than profit oriented lifeco annuities. There is a place (and time) to run a financial plan to perhaps 90 or 95, but have some of one's assets in longevity insurance if one lives to 100 and beyond. The combination is better than one might think at first blush.
> 
> I won't be buying any such annuity because I have the resources to fund my life however long it goes, but not many have that luxury. Financial plans are very situational AND personal. There is no single right answer.


I probably should have explained myself better ... wasn't saying there's no place for annuities in a retirement plan for some people, I was saying I'm not comfortable with the idea of handing over a chunk of money for an annuity because the principal is gone forever, and there's no possibility of passing that down. I also don't know a lot about annuities so I can't really have an informed discussion about them. My response is a "gut reaction" to handing over a chunk of my retirement fund to an insurance company. Who else sells annuities other than them? How is a DB pension annuity different from what an insurance company sells, and who sells them?

I realize one could come out ahead with an annuity if one lived long enough, but the opposite could also happen. Once one buys an annuity it can't be undone like other investments. I'm not up on the topic, but my personal comfort level is not to hand over a chunk of capital that I no longer have any say in other than to collect monthly income. If I decided down the road I wish I hadn't done that, then it would be a mistake that can't be undone. 

Yes, I know insurance companies use actuarial data as they do for life insurance premiums ... for me, it's hard to imagine that an annuity wouldn't be tipped in their favour to make profit. If there are other types of annuities I haven't heard of, then I'd be interested to hear. However, if anyone commenting on annuities sells them, that should be stated.

As you can see, I don't know much about annuities, but my comfort level with the idea is low.


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## Eclectic12 (Oct 20, 2010)

https://www.theglobeandmail.com/glo...ings-to-know-about-annuities/article23342537/
https://retirehappy.ca/the-math-of-life-annuities/
https://www.moneysense.ca/save/retirement/annuities/everything-you-need-to-know-about-annuities/


Cheers


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## Foxx88 (Aug 1, 2019)

Eclectic12 said:


> https://www.theglobeandmail.com/glo...ings-to-know-about-annuities/article23342537/
> https://retirehappy.ca/the-math-of-life-annuities/
> https://www.moneysense.ca/save/retirement/annuities/everything-you-need-to-know-about-annuities/
> 
> ...


Thank you for the links ... I'll read up soon.

I'll edit to add: My financial planner would compare an annuity with how well my investments could do/are doing elsewhere. I have a lot of money in balanced funds that have had 9.2% annualized returns over 10 years, and 8 and 8.4% since inception, inclusive of fees. Of course, we all know past performance is no indication of future performance. The thing to determine would be whether an annuity would potentially provide returns better than how I'm already invested.


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## AltaRed (Jun 8, 2009)

Foxx88 said:


> As you can see, I don't know much about annuities, but my comfort level with the idea is low.


Not suggesting they are, but just don't denigrate them. They have a place for longevity insurance, especially for those that don't have a portfolio that can see them to the 'end'. 

A commercial annuity at current (low) interest rates is not going to compete with CAGR 8% returns or perhaps even CAGR 6% returns so that is not a favourable choice now. You would be wasting your money having that analyzed now, but keep your mind open to it as you age towards 75-80. Who knows whether CAGR returns of 6% will even be possible, or whether interest rates have doubled or tripled making an annuity for a good portion of one's remaining life an attractive option? The investing environment can change as well as one's personal circumstances.


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## Foxx88 (Aug 1, 2019)

AltaRed said:


> Not suggesting they are, but just don't denigrate them. They have a place for longevity insurance, especially for those that don't have a portfolio that can see them to the 'end'.
> 
> A commercial annuity at current (low) interest rates is not going to compete with CAGR 8% returns or perhaps even CAGR 6% returns so that is not a favourable choice now. You would be wasting your money having that analyzed now, but keep your mind open to it as you age towards 75-80. Who knows whether CAGR returns of 6% will even be possible, or whether interest rates have doubled or tripled making an annuity for a good portion of one's remaining life an attractive option? The investing environment can change as well as one's personal circumstances.


Haven't read all the articles you provided links to, but quickly scanned one that suggested, as you say, annuities might be better bought when one is considerably older. I appreciate the information and will keep this in the back of my mind. My FP has never said I don't have enough money to see me to the 'end' ... that would only happen if I overspent. I anticipate there will still be money left unless I live an incredibly long life, such as to age 110, which isn't in my family history.


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## sags (May 15, 2010)

I receive a DB pension, but I was offered the commuted value before I retired.

The commuted value offered would have bought an annuity benefit that wasn't even close the DB monthly benefit.

It is widely known that commuted values won't buy an annuity that replaces the pension. The insurance companies don't work for nothing.

The only way to beat the pension benefit is by investing the money well on your own, and that will require a mixture of luck and skill.

If people don't have a pension and want a fixed income, an annuity might be something to consider, but people shouldn't make the mistake of comparing it to a DB pension.


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## ian (Jun 18, 2016)

My understanding is that one of the key reasons why market annuity returns are lower than pension plan returns is fairly straightforward.

People who buy annuities are typically in good health. So much so that they expect to beat the mortality tables-and many do. So insurance companies adjust their rates to reflect the typical longer average lifespan than the general population...which includes DB plan members.

I believe that annuities can be a good solution for some people. Especially those who are 70 plus, in good health, and when interest rates are high/annuity costs low. It certainly is not a one size fits all situation.


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## Foxx88 (Aug 1, 2019)

sags said:


> I receive a DB pension, but I was offered the commuted value before I retired.
> 
> The commuted value offered would have bought an annuity benefit that wasn't even close the DB monthly benefit.
> 
> ...


I don't have a DB pension because I was self-employed for many years, and before that where I worked didn't have a pension plan anyways. What I'm retiring on is investments and CPP.

Edited to add: the majority of my retirement income from investments.


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## Mechanic (Oct 29, 2013)

Foxx88 said:


> I don't have a DB pension because I was self-employed for many years, and before that where I worked didn't have a pension plan anyways. What I'm retiring on is investments and CPP.
> 
> Edited to add: the majority of my retirement income from investments.


Same boat I am in. CPP isn't much for wife and I and only pays about $1200/mth but I have several registered and unregistered investments that I look after myself, while drawing down from what I consider a cash wedge. The cash availability eliminates having to sell investments at the wrong time.


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## GreatLaker (Mar 23, 2014)

I would be interested in seeing some what-if scenarios or sensitivity analysis on living to age 100 or 110 vs. a more traditional planning number like age 90. Maybe you could get your planner to analyze that for your situation. If the plan included ramping down spending as one ages, it might not be that significant. For myself I am using variable withdrawal, and have planned to leave a moderate sized estate. If I start running out of money the estate and the value of my house are a safety net.

For annuities, I look at them as longevity insurance, not an investment. I have no pension so an annuity might help mitigate the risk of running out of money due to failure to die in a timely manner. You don't buy life insurance and say "damn I did not die so all the money I spent on premiums was wasted". You don't buy house insurance and say "darn, my house did not burn down so all those insurance premiums were wasted". So why would you say the money spent on an annuity was wasted just because you did not live longer than your actuarial life expectancy. If you live a very long time you could say wow that annuity was worthwhile. Or if you died shortly after buying an annuity I guess you could say crap that annuity was really a waste of money.....no, wait... 

To me you don't buy an annuity as an investment or for normal life expectancy or market performance. You buy it to protect against living a long time and running out of money, or against bad market performance eroding your money. It does not however protect against inflation*, but deferring CPP to age 70 can do that, as can equity investments. People with an inflation indexed DB pension that covers all their expenses have little worry about outliving their savings. And people that have low savings but that can responsibly live on CPP/OAS/GIS also don't have to worry about outliving their meagre savings. But for many people between those two positions, an annuity could provide protection against adverse circumstances.

It's easy to say you could do better by investing, especially over the past decade's bull market. But there have been times like the crash of 1929, the dirty thirties, the stagflationary 1970s and the lost decade of the 2000s where poor market returns could cause sequence of return risk to do some real damage to an investor's portfolio.

I went to a free retirement planning seminar at the local library. The speaker was from IG Wealth (formerly Investors Group). I asked about purchasing a basic, single premium, immediate annuity somewhere between age 70 and 80. The speaker's response was that purchasing a deferred annuity now (I'm early 60s) makes sense because I would get higher payments in the future. Well duuuuhhhh! The insurance company would have my money to invest for many years before the payouts started. And the cynic in me says the advisor's motive is to make a commission now, not in 15 years. But that won't stop me from considering an annuity when the time comes. It can also protect against dementia or scammers / financial abuse by locking up enough funds to live on when you could be most vulnerable.

I've tried to develop a flexible plan with diversified assets and income streams that will survive good times and bad times, not just hope for a rosy future influenced by recency bias.

*An inflation indexed annuity could protect against inflation, but I have heard they are very expensive due to the insurance company having to take on unknown future inflation risk.


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## Canadafan (Oct 19, 2014)

Foxx88 said:


> Last year I hired a financial planner to do overall planning and retirement planning, after having found myself in a position to potentially retire early. I'm coming up to the end of the first year using this planner's services and so far I'm happy. However, there's one issue I want to discuss with the planner, and that's the outer age limit used for my financial plan, which is one factor that will affect how much monthly income I draw. The age the planner uses for all clients is 110. Yep, 110! At the risk of sounding negative, I don't think I'll live beyond 90 (based on family history) and neither of my parents made it to 85. I had one grandmother who lived to 105. When I tell my friends the planner is basing my financial plan on potentially living to age 110, they say that's ridiculous. I know he's chosen that age to ensure the financial plan outlives any eventuality in life expectancy.
> 
> *So the question is: what AGE do people think financial planning should go to? What is reasonable? What is the norm to plan to?* I thought maybe 100 ... one friend said 90. I think 110 is far, far beyond what I'll live to.
> 
> Given that most of my retirement income will come from investments (I don't have a pension plan), I certainly have to ensure that my money outlives me, and I want to leave something for my children. I have enough money to retire on comfortably but not so much to live lavishly (not my style anyways, but I do want to travel more than I have in the past and travel isn't cheap). However, my feeling is that the age to which the planner is planning will have a bearing on my sustainable monthly income, and thus how much travelling I can afford. It's important to balance living life to the fullest possible while ensuring I don't run out of money. But age 110 ... my feeling is this is likely 25 years beyond what I'll live, and at a minimum 20 years beyond. Of course, no one has a crystal ball. But the average life expectancy for women in Canada is about 85.


I like to answer the question asked and only that.
First 110 is far too long. Even if you were alive then you wuld not be doing much.
If you live in Canada, even without any funds beyond your won RRSP/RRIF/...or what ver it is structured as, we have social safety net, that would provide long term care.
Yes there are those over 100 still on their own, but that number is avery small % .
Now the second part: If you are in excellent health & from a genetic pool of long life. I would plan to 100
If you have normal health etc. & you mentioned family to age 85? Id go to 95. Essentially 10 years past your expecte life span.
..One commong stratagy many use;
Do planning to age X, not counting the residence. If you outlive your $ and by "that" age.will probably need some type of long term care.
Either a retirment home, or nursing home.
That can be funded by selling the house.
Ironically, my wife & I will be meeting with a fiancial planner to discuss the very plans you ask about.
Ill be requesting age 95 as the end date. Not counting our home...depending on numbers might even use 90.
I also have some life insurance & will be converting about 20% of RRSP funds to an annuity at some point.
All plans need to be looked at Holistically. Including CPP/OAS/ other gov funds. 
We have to be honest, when looking at the future.
Im not 65 yet, I know many people who are older than me.
One aunt who is mid 90s, She lives in a retirement home. For her age, great mental shape. Asside form the monthly rent costs, spends very little/year.
One uncle low 91, bad health last 3-4 years. 
Friend of mine recently lost mom & dad late 80s low 90. Last few years of either life, they did very little.
Point is, we may live longer, but reality is, unless you are near athletic in your 60s, your 80s will become the turning point of costly activities.
Yes..I know full well eveyone has a story, of a relative who is 99 and still driving etc, but that is not the norm.
One other story. I have been on a pension/investment advisory committee years ago. We had a speaker come in from WM Mercer: Look them up. Top actuarial firm in canada.
Pension advisors to the largest in Canada.
The speaker that that time ( 1995) said " the majority of retirees will pass away with more $ than they started with"
Why? They over saved, over planned ( 110 yrs) and in retirment, spend way less than expected.
I appreciate NOT The majority, but I know 7 sets of people, in mid 60s to late 70s, who are in retirment and accumulating money.
Three of the six can not possiby without a major change of lifestyle, outspend their assets. Not even counting the house.
As Canadians we are a frugal/conservative bunch. 
The financial plan needs to/should take into consideration the tipping point, when expenses drop off. while at the same time the portfolio is still growing?
Very few do & you end up with a case of a big bundle to leave to the kids
To conclude: pick an age you think you will live to, add 10 years to be safe.
The house, CPP/OAS/other will coast you through the rest.


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## HermesHermes (Mar 24, 2017)

I think it's reasonable to ask...

When did your parents die? Then, add 8-10 years if you don't smoke, don't drink much, do exercise and do eat properly. Improved medical care plus healthier habits mean we will live longer than our parents. I would bet money on it. However, you may want to go the way of Socrates rather than spend the last five years miserable.

One man's opinion only.


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## Retiredguy (Jul 24, 2013)

I (virtually) attended the BC Municipal Pension Plan AGM last week - Oct 15th. It is the 6th largest pension plan in Canada with about 60B in assets and about 250,000 members. The plan actuary was asked about life expectancy and said at age 60 they expect males to live to average age 87, females to age 90, and in fact plan members live longer.

Interestingly Stats Canada indicates less, men age 80.5, women 85. (At age 60)


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## james4beach (Nov 15, 2012)

Retiredguy said:


> I (virtually) attended the BC Municipal Pension Plan AGM last week - Oct 15th. It is the 6th largest pension plan in Canada with about 60B in assets and about 250,000 members. The plan actuary was asked about life expectancy and said at age 60 they expect males to live to average age 87, females to age 90, and in fact plan members live longer.
> 
> Interestingly Stats Canada indicates less, men age 80.5, women 85. (At age 60)


That's interesting. I'm sure the pension actuaries take into account that it's a different population of people who are pension recipients. Municipal employees are wealthier (at least middle class) than the general population.

So I could imagine the Stats Can numbers are for all Canadians (including the very poor) whereas pension actuaries consider a subset of Canadians which are wealthier due to life circumstances. The big factor, I would think, is that a government job ensures someone is middle class.

For most of us around here, the pension's numbers are probably more relevant. Now imagine that with females already making it to age 90, in just a few years, we'll be talking about female life expectancy towards 92.

Now imagine this female never smoked and led an active lifestyle. Suddenly you're talking life expectancy approaching 100.

A healthy female investor at age 60 is basically just at the start of her investing adventure, with many decades to come.


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## Retiredguy (Jul 24, 2013)

Yes, shouldn't surprise anyone that people with more money are more likely to live longer than those who don't have it. Still I was a little surprised at 87/90. My thinking would have been more like 84/87. As to whether the BCMPP puts pensioners into middle class? ... From the 2019 annual report; 
Pensions granted 6855 (in 2019), Average yrs of service 17, Average age 61. Average pension $21,200, Median pension $15,600, and at 65 all MPP pensioners face a reduction in their Municipal pension (based on their years in the plan) as it is integrated with CPP and they can then start drawing it. 

Anyway guess I have to plan for 97 (expectancy +10 seems to be the CMF consensus) and my wife 100!


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## james4beach (Nov 15, 2012)

Retiredguy said:


> As to whether the BCMPP puts pensioners into middle class? ... From the 2019 annual report;


Just to clarify, I meant that someone who had the municipal job during their working years was probably middle class in those years, and therefore healthier than the average Canadian. It wasn't a statement about the pension payment levels.



Retiredguy said:


> Still I was a little surprised at 87/90.


I'm also surprised it's that high.


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## AltaRed (Jun 8, 2009)

As am I surprised it is that high, but that may be target levels for other purposes. StatsCan has longevity data for different quintiles of income, by gender, showing 95% confidence levels of reaching a particular age...using various starting ages (5 year increments I believe). I recall seeing that chart recently and the difference between highest and lowest quintiles of income was not much over 1 year (makes sense). I also seem to recall that for someone aged 70 today, there was a 95% confidence level of reaching age 83-84. At 75, reaching 86-87 (or something like that, at age 80, reaching almost 90. If I find it again, I will link it.


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## kcowan (Jul 1, 2010)

Here is how life expectancy has been increasing in Canada:
Canada Life Expectancy 1950-2020








and these are averages. The standard deviation is +- 8 years, so there is a 20% chance of living to 93. Obviously individual longevity will vary, and future trend may go down due to Covid-19.


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## AltaRed (Jun 8, 2009)

Life expectancy from birth is different than life expectancy at age 50, or age 80, because by the time one reaches a milepost, some of us will have already died due to disease, accident, or by other means during the intervening period. It is more accurate to use data based on one's specific age. StatsCan data does that with more certainty as I mentioned in post #81. A man at age 70 can, on average live to age 83. 

IF that same man lives to age 80, he can expect, on average, to now live to age 87.7 simply because some have died in the intervening 10 years.
IF he makes it to 90, he can, on average, expect to live to age 94.2. This chart does not show it, but IIRC, at age 95, the statistics are about 50/50 of living another 1-2 years, etc.


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