16 February 2012|
Warning, spoiler alert on the story of your life.
In the financial planning process, the issue of longevity is easily one of the most complex variables to work through.
If a financial plan greatly overestimates longevity, you likely have a plan that recommends a more conservative lifestyle than necessary. Conversely, if it assumes death earlier than what actually occurs, there is potential for “running out of money” during your lifetime. Financial planners call this longevity risk.
We’ve all heard the saying “you can’t take it with you”, but it would sure be nice to have that option. However, if we could better approximate the point of death, we’d have one less variable in the financial planning process.
Fortunately, there are some researchers working towards that goal. Well beyond the standard run-of-the-mill actuarial tables, this tool would use your genetic information, lifestyle, and health metrics to accurately predict your age of death.
Sounds fun doesn’t it!? Enter the fascinating and slightly scary field of predictive analytics. We happened upon an interesting article in SmartMoney Magazine, The Cost of Living Longer - - Much Longer, that touches on the issues of longevity, financial planning, and research in predicting longevity.