The long and short of life expectancies and retirement

Arecent article in Magnolia’s Banner News caught my attention. The story was on a Camden woman, Gertrude Weaver. It turns out Gertrude may be the oldest living person on the planet. That’s pretty incredible to think about, that out of 7 billion people or so, the oldest one lives practically in our neighborhood. So how old is Gertrude? Well, would you believe 116?

Gertrude celebrates her birthday on July 4. That’s a curious date and likely one just given to her. I recall a family friend from childhood who used January 1 as her birthday because, as she put it, “they just didn’t keep up with things like that back then.” Nevertheless, Gertrude was born in 1898 and is one of only five people alive that were born in the nineteenth century, all women of course. The same article reported on a lady in Japan born in March of 1898. If Gertrude’s actual birthday is prior to the Japanese lady, Gertrude is the oldest known person alive. If not, she’s in second place. Still, that’s a wonderful accomplishment. Gertrude lives in a nursing home in Camden, where she has resided since 2009.

Gertrude is a staunch reminder of what’s going on with life expectancies: they are going up. When Gertrude was born, the life expectancy in the U.S. was less than 50 years. When Social Security came into being in 1935, the average life expectancy had climbed to 63 years. Now it’s roughly 80 years in the U.S. Keep in mind that these broad numbers average in all births, including children who die at young ages. So infant and childhood mortality drags the averages down. According to Social Security data, a male at age 65 has an average life expectancy of another 19 years, to age 84. So out of 100 males, if 84 years is the average, then we expect that 50 will die prior to age 84 and 50 will live beyond age 84. For females add roughly another 2 years to those numbers.

All of this data comes out of charts called mortality tables. In other words, given your particular age and gender, the mortality tables tell how much longer on average you are expected to live. Because of folks like Gertrude, the tables run all the way to age 119. According to the tables, Gertrude has a remaining life expectancy of only 0.71 years. But she also has a long history of beating the odds.

So at what age are Americans actually retiring now? While a number of firms collect such data, I’ll report what Gallup findings show. Currently Americans are retiring at the average age of 62. This is the highest age since Gallup started asking this question in 1991. Over the last ten years, the average age at which people retire has increased from 59 to the current 62. It’s also interesting to note the difference between when folks actually retire and when they expect to retire. When Gallup asks non –retirees when they expect to retire, the average age is a fairly constant four years higher than the actual retirement age. For the data just released by Gallup, the average non-retiree expects to retire at age 66. But folks are retiring at age 62 on average.

So where am I going with this? The typical American will retire at 62 and live to be 85, plus or minus for gender differences. That means 23 years of no paycheck on average. That’s going to take some planning. I recently attended my fortieth high school reunion. I was surprised by the number of folks who had already retired at the age of 58 or earlier. I recall in particular the conversation I had with one guy. I asked Mike what he was doing now. He said he had retired several years back. He went on to say that he had faithfully read my column over the years and had generally taken my advice. Then Mike asked, “So, David, what are you doing?” “I’m still working,” I replied. Oh, well. Happy Birthday, Gertrude!

(J. David Ashby is a professor of finance and economics at Southern Arkansas University in Magnolia. He can be reached at jdashby@saumag.edu.)