The risk of DEATH ---- under-discussed on this forum?

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brian91480
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The risk of DEATH ---- under-discussed on this forum?

Post by brian91480 »

I came across a video that got me thinking:

Do people on the Boglehead forum under-estimate the realistic risk of normal life expectancy?

The video -- linked below -- talks about the percentage chances that people have to live to certain ages, based on the general Social Security estimators. The overall point of the video is this:

You are more likely to be dead before you become old and broke -- so quit worrying so much about that unlikely outcome.

In countless posts on this forum, I read about "do I have enough money" or "what is the safe withdrawal rate"? Folks on this forum tend to be extremely cautious and analytical --- about running out of money prior to a long retirement life. Sometimes to be extra safe, people even exclude Social Security in their retirement calculations. Or they hit their goal for X number in savings, but then feel the need to pad that number by a few additional "X" numbers, just in case!

Yet the same analytical people are minimizing a much more likely scenario: The realistic chance that they will be dead (or even extremely disabled?) before any of the bad financial outcomes can ever happen. So they spend extra prime-health years working, to try and minimize a non-likely outcome.

So when we evaluate the word RISK on this forum... shouldn't the pendulum swing away from the small chance of ''what if'' that causes me to go broke, many years into retirement' --- and have the pendulum swing back towards ''there's a 40% chance I'll be dead when I am 80 years old!''

For a person who likes analytics, that seems like common sense to me? I read a few comments here and there about not wanting to be the "richest person in the graveyard" upon death. But overall, there is an imbalance in the discussions that I see.

As my friend on this BH forum, Patzer, told me:

"It's sad, because people will plan for 95-100% success rates, to life expectancies that they only have a few percent chance of living to, and then talk about padding that with a few more years of work. I would rather take a couple percent chance of having to go back to work for 2-3 years to fix an off course retirement, then take a 100% chance of working 2-3 extra years to try to mitigate that risk even more."

Link to video: https://www.youtube.com/watch?v=mV2IM-WE2qA

--- Brian

PS. I can be guilty about thinking about some of these things that I am saying should be more controlled. So I acknowledge that this topic is difficult to properly balance.
terran
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by terran »

Here's a "fun" calculator that compares your chances of having enough, running out or dying; https://engaging-data.com/will-money-last-retire-early/
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Kenkat
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by Kenkat »

There was a discussion awhile back that included a calculator that took death into account - i.e., rich, broke or dead:

https://engaging-data.com/will-money-last-retire-early/

Unfortunately or fortunately depending on your perspective, we can’t plan for our death date so we have to have some sort of buffer built in for a long life. I think social security is probably the best way for most people to insure for this, so the common advice to delay as long as possible is good.

p.s. dang, terran beat me to the draw :wink:
AnnieK
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by AnnieK »

I have this discussion with people often. I plan to live to 100 knowing the chance of me getting there is tiny. I have been poor before and I will never, ever be poor again if I can help it. The thought of running out of money just one day before I'm dead terrifies me.


-AnnieK
H-Town
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by H-Town »

brian91480 wrote: Thu Dec 02, 2021 11:25 am
Do people on the Boglehead forum under-estimate the realistic risk of normal life expectancy?
I don't speak for anyone else, but this is definitely not the case for me. I am thankful for every morning I wake up. I live one day at a time.

But it does not mean that my financial planning has to take the same approach. I wanted FI fast and achieved that goal. Now I move on to other things.

Being FI guarantees that the day I kick the bucket, whenever that day is, I still have a lot of money to give away.
Time is the ultimate currency.
visualguy
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by visualguy »

Life expectancy statistics for the entire population are of somewhat limited applicabity when looking at a subset such as Bogleheads. I would expect the numbers to be higher for Bogleheads than the general population.

The risk of relatively early death is there, but it's not huge, so it's not something you should use in making planning decisions unless you know you're particularly susceptible to it. The risk of being incapacitated to varying degrees is higher, but that can actually require having more money put aside.
Dude2
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by Dude2 »

Deferring SS until max age would be a good strategy to employ. In case you ended up living far longer than you planned to, at least you'd have the max SS coming in. That might get you a bed somewhere.

I've had fights before on the forum with regard to survivorship bias. Mostly I lost those fights. In general when a person get to a particular age, there is a high probability they will live another x years. I guess this math has been proven out, so you'd have to first establish what age you are planning to get to and then determine how much longer you'd live from there. This is a bit of a nerd joking around. Clearly there's a chicken and egg problem.

Honestly, I just feel that it is the most responsible course of action to plan as if I will live a normal life span. If I don't, well then that just goes to heirs. What would be the alternative? Should I carpe diem?
Then ’tis like the breath of an unfee’d lawyer.
alfaspider
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by alfaspider »

visualguy wrote: Thu Dec 02, 2021 11:43 am
The risk of relatively early death is there, but it's not huge, so it's not something you should use in making planning decisions unless you know you're particularly susceptible to it. The risk of being incapacitated to varying degrees is higher, but that can actually require having more money put aside.
Another point: as someone going through end of life issues for a relative right now, having ample funds available late in life can make an enormous difference in their quality of life. Something as simple as dying at home with a modicum of dignity may not be available unless you have the ability to pay out of pocket for in-home care (at least for the short term).
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JoeRetire
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by JoeRetire »

brian91480 wrote: Thu Dec 02, 2021 11:25 am You are more likely to be dead before you become old and broke -- so quit worrying so much about that unlikely outcome.
The video is a lot of nonsense. "You are probably going to be dead so quit worrying." Does anyone actually make plans based on "you are more likely"?

The same line of thinking would pertain to "You are more likely not to have your house burn down. So quit worrying and spend the money for your homeowner's insurance on something else." or "You probably won't die before you are 60. So quit worrying and don't waste your money on life insurance to protect your spouse and children."

You can plan on dying by 80 if you like and not save any money for beyond that age. Maybe you won't be broke due to social security, or the kindness of your family.
For me, I'm going to plan on a long life and make sure I will never be broke.
Last edited by JoeRetire on Thu Dec 02, 2021 12:06 pm, edited 1 time in total.
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MathWizard
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by MathWizard »

Those of us who are married have to worry about longevity risk.
From https://www.kitces.com/blog/life-expect ... survivors/
the odds of one of a married male-female couple , both aged 65 of reaching 95 is 18% .
Add into that information that people who are more wealthy tend to live longer
(presumably from better health care and less risky environments/behaviors), and the percentage
would increase.

For me, my wife comes from an especially long-lived family, so I plan for one
of us to die at age 85 (need to pick some number for the impact on income tax filing status)
which is most likely me, and the survivor to last to 100.

The other concern is long term care (LTC). Those of use who do not like LTC policies
need to have extra money for LTC. By having money for living beyond an average
lifespan, if that is cut short by health issues, that extra money can be used for LTC.
My biggest worry in that regard would be a long term disease which required
a decade long LTC, but there will always be risks.

I'm with AnnieK. I've been very poor, and I am now FI. I do not want
to go back to being poor.
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langelgjm
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by langelgjm »

A little over a year ago, my father told my mother he wasn't feeling well, and lay down on the floor. He died a few minutes later at the age of 81.

This week, one of my high school classmates, a mother of 3, died after a several years long struggle with cancer. She was 36.

Death is real and comes for us all. Actuarial science can help in terms of financial planning, but the big blind spot I see in many discussions on this forum is not so much about finances, as it is about how one wants to live one's life. So many people recommend working "a few more years" or saving a few hundred thousand more, a million more, "just in case".

But those decisions come with a real possibility that you might never get to enjoy what you've worked and saved for. It's not just about death, either - illness, disability, and general aging can drastically limit your activities and lifestyle. This doesn't mean you throw caution to the wind and head to Vegas, but it does mean being aware that sometimes pushing things into the future may mean never doing them at all.
"Simplicity is the master key to financial success." - John Bogle | "If I am what I have and if what I have is lost, who then am I?" - Erich Fromm
iamblessed
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by iamblessed »

Josh what about Health Care? LOL I love it when he does that.
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brian91480
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by brian91480 »

JoeRetire wrote: Thu Dec 02, 2021 11:52 am
brian91480 wrote: Thu Dec 02, 2021 11:25 am You are more likely to be dead before you become old and broke -- so quit worrying so much about that unlikely outcome.
The video is a lot of nonsense. "You are probably going to be dead so quit worrying." Does anyone actually make plans based on "you are more likely"?

The same line of thinking would pertain to "You are more likely not to have your house burn down. So quit worrying and spend the money for your homeowner's insurance on something else."

You can plan on dying by 80 if you like and not save any money for beyond that age. Maybe you won't be broke due to social security, or the kindness of your family.
For me, I'm going to plan on a long life and make sure I will never be broke.
I'm advocating a centrist position. Nobody is suggesting throwing caution to the wind. I'm suggesting that maybe this forum's posts are a bit over cautious.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by sailaway »

I have seen, up close and personal, what it means to be destitute at 85. It looks much worse than working extra time now.

Ideally, people are living their best life even while they are working, taking time to travel, if that is of interest to them, and spending time with loved ones. We bought a boat as soon as we started thinking about retiring on a boat, hoping to build skills while still working. DH had just turned 28 when we bought that boat and neither of us had heard of FIRE. A lot has changed over the last decade, but we both agree that buying that first boat was crazy, and completely the right decision for us.
alfaspider
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by alfaspider »

brian91480 wrote: Thu Dec 02, 2021 12:09 pm
JoeRetire wrote: Thu Dec 02, 2021 11:52 am
brian91480 wrote: Thu Dec 02, 2021 11:25 am You are more likely to be dead before you become old and broke -- so quit worrying so much about that unlikely outcome.
The video is a lot of nonsense. "You are probably going to be dead so quit worrying." Does anyone actually make plans based on "you are more likely"?

The same line of thinking would pertain to "You are more likely not to have your house burn down. So quit worrying and spend the money for your homeowner's insurance on something else."

You can plan on dying by 80 if you like and not save any money for beyond that age. Maybe you won't be broke due to social security, or the kindness of your family.
For me, I'm going to plan on a long life and make sure I will never be broke.
I'm advocating a centrist position. Nobody is suggesting throwing caution to the wind. I'm suggesting that maybe this forum's posts are a bit over cautious.
May also depend on how you feel about providing an inheritance to your heirs. Personally, I'd like to leave enough so they get something substantial to help them along their way without giving so much that they would be tempted to totally walk away.
Tom_T
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by Tom_T »

My guess is that most BHers are going to be in pretty good shape retirement-wise, if they aren't already, and that they don't have to worry about age 80 or 85 or 90. I haven't seen anyone propose working like a dog until 70 because they need the five extra years of work if they want to make it to 90.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by wrongfunds »

By the way, many BH no longer stop at 100 year mark. 115 is the new 100.

And if we had a HealthNumber like financial portfolio number, then we would try to maximize that. May be there is app for it? But it needs to be universally accepted and easily displayed on your smartphone every single second.

We might smarten up when we see our HN drop every single day and when the drop gets steeper.
wrongfunds
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by wrongfunds »

The inheritance is overrated for a real BH. If BH is planning to live for 100 or 115 years old, her heirs will definitely not enjoy the windfall when they themselves will be 80 or 95 years old.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by Teague »

You say that many analytical persons make an error by not ascribing enough weight to mean/median life expectancy.

I'd argue that their analysis is more thorough than that: they take into account the tremendous and largely unpredictable variance about those averages, and I'd further suggest those who do not are the ones in error.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by 59Gibson »

I remember a post several months ago of someone planning on 115. Wow. A very small % of BH will make it to 100, otoh medical advancements could make 100 the new 80 in the future. :happy
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by sailaway »

wrongfunds wrote: Thu Dec 02, 2021 12:24 pm The inheritance is overrated for a real BH. If BH is planning to live for 100 or 115 years old, her heirs will definitely not enjoy the windfall when they themselves will be 80 or 95 years old.
Did bogleheads have kids at 20?

My in laws seem convinced that at least one of their kids *needs* their inheritance, but I fully expect even that one to be retired before we have held two funerals...
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by Luckywon »

Teague wrote: Thu Dec 02, 2021 12:29 pm You say that many analytical persons make an error by not ascribing enough weight to mean/median life expectancy.

I'd argue that their analysis is more thorough than that: they take into account the tremendous and largely unpredictable variance about those averages, and I'd further suggest those who do not are the ones in error.
+1. Unwise to make a bet you literally can't afford to lose.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by TheHiker »

One is not likely to be run over by a car when crossing the street, yet one should look both ways before crossing...

That something is not likely does not mean you should not be prepared.
Dying rich is not something that worries me. Dying poor does (even if it is less likely).
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by surfstar »

brian91480 wrote: Thu Dec 02, 2021 11:25 am For a person who likes analytics, that seems like common sense to me? I read a few comments here and there about not wanting to be the "richest person in the graveyard" upon death. But overall, there is an imbalance in the discussions that I see.

As my friend on this BH forum, Patzer, told me:

"It's sad, because people will plan for 95-100% success rates, to life expectancies that they only have a few percent chance of living to, and then talk about padding that with a few more years of work. I would rather take a couple percent chance of having to go back to work for 2-3 years to fix an off course retirement, then take a 100% chance of working 2-3 extra years to try to mitigate that risk even more."
Yes it is under-discussed in this forum. I'd say the majority of people here do not have hobbies that they enjoy more than work or accumulating wealth. The people who do not ascribe to this thinking are more likely found on one of the FIRE forums.

We want to FIRE as soon as practically possible - for our own situation that means not "extreme" FIRE or anything crazy regarding cutting expenses close to nil and living in a Van, but we are much closer to the FIRE side of the spectrum, than the BH work until we've accumulated more than we'll ever spend side.

My view is that it is a Catch-22:
If you are someone who is so driven to be a high performer at work and accumulate a lot of status and wealth via your job; you are also unlikely to want to FIRE and "lose" all of that.
If you are someone who hates going to work on Mondays and would rather extend your weekends indefinitely, you are unlikely to be so driven at work that you become a higher earner and could FIRE.
There are always exceptions, but I think these categories easily account for a majority of people across the spectrum.

I always ask those who have achieved more wealth than they need, yet continue to work; to donate to my FIRE fund. Hasn't worked. Hopefully they donate to charitable orgs at least.
Ooh - new app/website idea - GoFIREfundMe!!! lol
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by wrongfunds »

sailaway wrote: Thu Dec 02, 2021 12:41 pm
wrongfunds wrote: Thu Dec 02, 2021 12:24 pm The inheritance is overrated for a real BH. If BH is planning to live for 100 or 115 years old, her heirs will definitely not enjoy the windfall when they themselves will be 80 or 95 years old.
Did bogleheads have kids at 20?

My in laws seem convinced that at least one of their kids *needs* their inheritance, but I fully expect even that one to be retired before we have held two funerals...
OK, make that 70 or 85 year old heirs. Does that change my point?
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by dboeger1 »

wrongfunds wrote: Thu Dec 02, 2021 12:21 pm By the way, many BH no longer stop at 100 year mark. 115 is the new 100.

And if we had a HealthNumber like financial portfolio number, then we would try to maximize that. May be there is app for it? But it needs to be universally accepted and easily displayed on your smartphone every single second.

We might smarten up when we see our HN drop every single day and when the drop gets steeper.
My HN would definitely be in much worse shape than my NW, unfortunately. I need the health equivalent of Dave Ramsey to get me out of health debt, lol.
wrongfunds wrote: Thu Dec 02, 2021 12:24 pm The inheritance is overrated for a real BH. If BH is planning to live for 100 or 115 years old, her heirs will definitely not enjoy the windfall when they themselves will be 80 or 95 years old.
Inheritance can also go to grandchildren or other younger descendants. Many people also plan for charitable giving as a fallback to familial inheritance.

I agree that the risks are asymmetric, explaining why more focus is devoted to running out of money relative to its probability. That being said, if I have one bone to pick with the average Boglehead, it's that many of us seem to think we need very high incomes in retirement. Wanting is one thing; I wouldn't begrudge anybody aspiring for a 6-figure income in retirement. But it does frustrate me when people insist they won't be able to get by on less than $100k. I won't go into all the reasons why I think spending obligations should be significantly reduced in retirement anyway, as this would become a very long post, but even if they stayed similar, if someone simply can't manage to live on nearly double the median household income, I'd say that says more about their spending than their savings. And yes, I know there are outliers with massive medical bills and other issues, but reading this forum, you'd think every other person was one of those.

I remember my family being broke and in debt when I was in high school. There was one time where a classmate of mine ran away from home because of family issues, so he was hopping from friend to friend spending as many nights as their parents would allow them. After spending a week at one of my close friend's houses (where his relatively well-off parents were always super generous with meals and such), he came over to mine and asked to spend the night. When he realized the only thing we had in the pantry was an almost-finished box of Cheez-Its, and the only thing to drink was tap water, he left on his own the next morning. I'm not trying to shame anybody, but forgive me if I don't cry a river for the people who ask if they can make it on $100k. Many people get by on far less. I think OP's point about death may be a bit far out for people to swallow, but surely we can stop to count our blessings and admit that the difference between $60k and $100k in retirement isn't about absolute poverty. They're different degrees of luxury in the grand scheme of things.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by JBTX »

brian91480 wrote: Thu Dec 02, 2021 12:09 pm
JoeRetire wrote: Thu Dec 02, 2021 11:52 am
brian91480 wrote: Thu Dec 02, 2021 11:25 am You are more likely to be dead before you become old and broke -- so quit worrying so much about that unlikely outcome.
The video is a lot of nonsense. "You are probably going to be dead so quit worrying." Does anyone actually make plans based on "you are more likely"?

The same line of thinking would pertain to "You are more likely not to have your house burn down. So quit worrying and spend the money for your homeowner's insurance on something else."

You can plan on dying by 80 if you like and not save any money for beyond that age. Maybe you won't be broke due to social security, or the kindness of your family.
For me, I'm going to plan on a long life and make sure I will never be broke.
I'm advocating a centrist position. Nobody is suggesting throwing caution to the wind. I'm suggesting that maybe this forum's posts are a bit over cautious.
The longevity of the highest 20%, which probably includes many Bogleheads, is materially longer than the median.


https://sgp.fas.org/crs/misc/R44846.pdf

Above shows on page 18 life expectancy, for those 50 years old for top 20% vs median 20% is a 5 year difference for men and almost 10 year difference for women. If true that is remarkable.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by Stinky »

JoeRetire wrote: Thu Dec 02, 2021 11:52 am
brian91480 wrote: Thu Dec 02, 2021 11:25 am You are more likely to be dead before you become old and broke -- so quit worrying so much about that unlikely outcome.
The video is a lot of nonsense. "You are probably going to be dead so quit worrying." Does anyone actually make plans based on "you are more likely"?

The same line of thinking would pertain to "You are more likely not to have your house burn down. So quit worrying and spend the money for your homeowner's insurance on something else." or "You probably won't die before you are 60. So quit worrying and don't waste your money on life insurance to protect your spouse and children."

You can plan on dying by 80 if you like and not save any money for beyond that age. Maybe you won't be broke due to social security, or the kindness of your family.

For me, I'm going to plan on a long life and make sure I will never be broke.
I think this is an absolutely excellent post.

As for me, I’ve tried to organize my affairs so that there’s an overwhelming probability that I will expire before my money does.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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iceport
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by iceport »

Teague wrote: Thu Dec 02, 2021 12:29 pm You say that many analytical persons make an error by not ascribing enough weight to mean/median life expectancy.

I'd argue that their analysis is more thorough than that: they take into account the tremendous and largely unpredictable variance about those averages, and I'd further suggest those who do not are the ones in error.
The variability and the fact that so very many factors — a mix of compounding and counteracting factors — influence life expectancy concerns me. It makes it difficult to put one's "life expectancy" into proper context. While a number could be approximated, the chances of dying significantly earlier or later than one's "life expectancy" are also pretty good. It seems to me that the risks of dying on the younger end of the retirement spectrum are often casually overlooked as universally unimportant. I'm interested in both ends of the mortality spectrum.



Using #Cruncher's excellent spreadsheet, it's easy to set the age of Pers1 to 62 — or any other starting age of interest — in Cell I3, and sum up the probabilities of dying in any age range of interest in Column P. (#Cruncher offered this spreadsheet in a thread I started exploring SS claiming ages.)



Some randomly selected age ranges, and the probabilities of dying within that range for a 62-year-old:

62—69: 13%
65—74: 20%
62—74: 24%

86—90: 20%
91—110: 18% (eye-opening!)

It seems to me that the chance of dying within each one of those arbitrarily chosen age ranges is significant enough to warrant consideration.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by Dottie57 »

My concern is the 18% chance of being alive between 91 and 110.
Last edited by Dottie57 on Thu Dec 02, 2021 1:20 pm, edited 1 time in total.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by chuckwalla »

Like most things in life, there is no right answer for everyone. However one chooses to live, we'll all end up in our local cemeteries in the end.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by UpperNwGuy »

Nobody knows when they will die. Here's what I know:
— The Social Security Administration's actuarial tables say I will die at age 86.
— My mother died at age 84.
— My father died at age 97.

I'm planning on having enough money to live into my mid-90s, including self-financed long-term care if needed.

If there is money left over, it will go to my kids. What I don't want to do is to run out of money before I run out of life.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by JoeRetire »

brian91480 wrote: Thu Dec 02, 2021 12:09 pm
JoeRetire wrote: Thu Dec 02, 2021 11:52 am
brian91480 wrote: Thu Dec 02, 2021 11:25 am You are more likely to be dead before you become old and broke -- so quit worrying so much about that unlikely outcome.
The video is a lot of nonsense. "You are probably going to be dead so quit worrying." Does anyone actually make plans based on "you are more likely"?

The same line of thinking would pertain to "You are more likely not to have your house burn down. So quit worrying and spend the money for your homeowner's insurance on something else."

You can plan on dying by 80 if you like and not save any money for beyond that age. Maybe you won't be broke due to social security, or the kindness of your family.
For me, I'm going to plan on a long life and make sure I will never be broke.
I'm advocating a centrist position. Nobody is suggesting throwing caution to the wind. I'm suggesting that maybe this forum's posts are a bit over cautious.
Sure. Some are a bit over cautious. Some are YOLO.
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JoeRetire
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by JoeRetire »

sailaway wrote: Thu Dec 02, 2021 12:13 pm Ideally, people are living their best life even while they are working
Bingo!

It's entirely possible to live a great life while working, yet still plan for a long, long retirement.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by Escapevelocity »

Tom_T wrote: Thu Dec 02, 2021 12:20 pm My guess is that most BHers are going to be in pretty good shape retirement-wise, if they aren't already, and that they don't have to worry about age 80 or 85 or 90. I haven't seen anyone propose working like a dog until 70 because they need the five extra years of work if they want to make it to 90.
True, but there are TONS of people on this forum who could easily have retired at 55-58 but worked until 63-65 for no other reason than their risk aversion. Maybe they loved their jobs, but most people do not.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by Teague »

chuckwalla wrote: Thu Dec 02, 2021 1:20 pm Like most things in life, there is no right answer for everyone. However one chooses to live, we'll all end up in our local cemeteries in the end.
Technically not necessarily as many other options exist. Cremation, Tibetan sky burial, burial as sea...

Of course, I suppose a true Boglehead might have their ashes interred in their 20 year old, 300k mile Toyota Camry (beige, of course) before it is hauled off to the scrapyard, with the $74.20 junk car payment going toward the check floated to the crematorium.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by Ependytis »

There is an implied assumption that being retired is better than working. I found that I really enjoy working, so don’t mind it even though I don’t have to work. I’ve noticed now that I don’t have to work, a lot of the stuff that bothered me before doesn’t really matter. I think the reason is I can walk away at any time. I can’t think of anything more important that I would be doing in retirement, since I work for a pharmaceutical company with a bunch of really smart people.

In terms of betting, I always believe you should never bet on something you can’t afford to lose, therefore I would prefer to work longer and save more than retire and risk being destitute.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by iceport »

Dottie57 wrote: Thu Dec 02, 2021 1:19 pm My concern is the 18% chance of being alive between 91 and 110.
Yeah, and that's for a 62 year old male. For a 68 year old female, the chance goes up to 31%!

Playing around with that spreadsheet is very interesting...
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by visualguy »

dboeger1 wrote: Thu Dec 02, 2021 1:05 pm That being said, if I have one bone to pick with the average Boglehead, it's that many of us seem to think we need very high incomes in retirement. Wanting is one thing; I wouldn't begrudge anybody aspiring for a 6-figure income in retirement. But it does frustrate me when people insist they won't be able to get by on less than $100k. I won't go into all the reasons why I think spending obligations should be significantly reduced in retirement anyway, as this would become a very long post, but even if they stayed similar, if someone simply can't manage to live on nearly double the median household income, I'd say that says more about their spending than their savings. And yes, I know there are outliers with massive medical bills and other issues, but reading this forum, you'd think every other person was one of those.
Location matters a lot on this kind of math, though. Also, it's very reasonable not to want to reduce your quality of life, move away from family and friends, etc. in order to reduce expenses in retirement.

Many plan on higher expenses in retirement because of the extra time for hobbies, travel, other entertainment, etc. as well as medical, dental, long-term care, helping family members, and the list goes on...
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by sureshoe »

You have to understand how risks are measured to understand people's behavior. Most people probably get this intuitively, but let's be explicit.

A risk is measured by its Severity and Likelihood. Then, you evaluate ability to mitigate.

So framing up the the reason you see so many "do I have enough" questions in terms of death, let's look at two risks:

1) The risk of dying early
2) The risk of dying late

In case #1 - dying early, death is very high severity. However, likelihood is less than 50% (earlier than average by definition). But most important, there is virtually no mitigation options or people would do it. (You could argue quitting a job helps you live longer, but that's very specific). And generally, most people are OK having some leftover money to give away. Few people want to die penniless in a subsidized rest home.

In case #2 - dying late, this too has a very severe penalty. If you choose to stop working, and run out of money, it can be a painful, ongoing experience at age 78 (or earlier) to be broke. Also, likelihood across the broader population is very high - lots of people lose lifestyle today when retiring (how to measure is tough). However, there are clear, manageable mitigation options.

That's why you hear more about #2 - risk of dying late, because the penalty is very severe, likelihood is high, but most important > this risk can be mitigated.

If there were clear ways to mitigate early death beyond diet, exercise, etc. you would see more questions about it. But right now, if I started a thread on "how can I avoid early death", it would get a bunch of bad answers and locked.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by Escapevelocity »

I am grateful to all the folks that work longer careers than they need to. it allows early retirees to live in a society that still has a reasonably sufficient number of experienced doctors, journalists, [fill in the blank] and it keeps the golf courses reasonably uncrowded during the week.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by visualguy »

iceport wrote: Thu Dec 02, 2021 1:36 pm
Dottie57 wrote: Thu Dec 02, 2021 1:19 pm My concern is the 18% chance of being alive between 91 and 110.
Yeah, and that's for a 62 year old male. For a 68 year old female, the chance goes up to 31%!

Playing around with that spreadsheet is very interesting...
And that most likely underestimates those odds because it's for the general population.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by MortgageOnBlack »

This thread makes me want to splurge a bit and go buy that brand new car
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by sureshoe »

And for what it's worth - I literally just had this conversation with a relative at Thanksgiving. I encouraged them to take Social Security as early as possible and spend their money. They're a smoker, so the odds of them getting much past 79 aren't fantastic.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by Dottie57 »

MortgageOnBlack wrote: Thu Dec 02, 2021 1:52 pm This thread makes me want to splurge a bit and go buy that brand new car
Hm. My splurges would be a new vacuum for hardwood floors or a guitar (nylon strings) to try to learn to play. One I do need and one is a fantasy.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by fabdog »

I'm advocating a centrist position. Nobody is suggesting throwing caution to the wind. I'm suggesting that maybe this forum's posts are a bit over cautious.
It's an asymmetrical problem. Sure, I could die early, and would have saved far more than needed. But my wife and kids will be fine.

Or, I could have taken more risk, and if the case turned out I lived to 90, and I was out of money... there is no way to fix that.

So, yes, I'm likely what you would call over cautious... to me it's just prudent.

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Re: The risk of DEATH ---- under-discussed on this forum?

Post by surfstar »

JoeRetire wrote: Thu Dec 02, 2021 1:29 pm
sailaway wrote: Thu Dec 02, 2021 12:13 pm Ideally, people are living their best life even while they are working
Bingo!

It's entirely possible to live a great life while working, yet still plan for a long, long retirement.
Meh - 8+ hours a day doing something that you don't want to do - that's not my "best life".

Wally might be able to closer meet your criteria:

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Re: The risk of DEATH ---- under-discussed on this forum?

Post by JoeRetire »

sureshoe wrote: Thu Dec 02, 2021 1:46 pm That's why you hear more about #2 - risk of dying late, because the penalty is very severe, likelihood is high, but most important > this risk can be mitigated.
Agreed!
If there were clear ways to mitigate early death beyond diet, exercise, etc. you would see more questions about it. But right now, if I started a thread on "how can I avoid early death", it would get a bunch of bad answers and locked.
I'm not sure the term "mitigate" is the right one to use here. "Mitigate" isn't the same thing as "prevent", nor even the same as "make less likely".
In some cases, you can mitigate the effects on others of your dying early with life insurance.

It isn't a matter of "avoiding an early death" any more than your #2 case is a matter of "avoiding a late death". It's a matter of reducing the impact of the death when it occurs.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by nisiprius »

This kind of argument is sometimes made by people who can't deal with uncertainty. Death is really unpleasant to think about. Uncertainty is really unpleasant to think about. It is quite natural to recoil from getting serious about it and just say, in various ways, "I'm not going to worry about it, I'll be dead long before then."

I think death is discussed reasonably often in the forum. The problem is that people yearn for certainty, for calculators that will tell them how long to plan for--and recoil at the implications of the variability of life expectancy.

This is from the SSA life table. For the population of people reading this, the mean would probably be higher, but it is the standard deviation and range I'm interested in talking about.

Image

The standard deviation, for both males and females, is about 7.6 years. Using the ±3σ rule of thumb, that would be around ±22 years as a reasonable range guesstimate. So in thinking about remaining life expectancy, we should not think of remaining life expectancy at age 65 as "18 years for males, 20 years for females" but more like "18±22 for males, 20±22 for females."*

For example, "women live longer," but there is plenty of red ink to the right of the peak of the blue ink; that is, many males live longer than the average female life expectancy.

But the point is that fifteen or twenty years more than "life expectancy at age 65" is not crazy optimism (or crazy pessimism from a financial point of view), but a reasonable planning assumption.

That chart has plenty of ink on it right of age 95.

I don't think I'll live to be a hundred, but the chances of even that happening are not too small to consider.

*1) In this post, "female" means "matched 23rd chromosomes," "male" means "one stunted 23rd chromosome). 2) Well, OK, obviously the distribution is skew, so any statistical experts who know how to do something more appropriate than ±3σ, by all means chime in.
Last edited by nisiprius on Thu Dec 02, 2021 2:22 pm, edited 8 times in total.
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Re: The risk of DEATH ---- under-discussed on this forum?

Post by JoeRetire »

sureshoe wrote: Thu Dec 02, 2021 1:56 pm And for what it's worth - I literally just had this conversation with a relative at Thanksgiving. I encouraged them to take Social Security as early as possible and spend their money. They're a smoker, so the odds of them getting much past 79 aren't fantastic.
I'm imagining the conversation at dinner: "Well look, you aren't going to live long so you might as well take you benefits and spend your money". Fun!
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