Updated but consistent message: each generation is expected to live longer than the last, and when considering retirement it’s a good idea to think of a likely lifespan in the range of age 90 to 95 years.
The latest update of StatsNZ data which is most helpful for answering the question How long could I live? was published in March 2023.
This post uses that data to suggest what age people in New Zealand should consider in their retirement planning. Understanding how long you might live is a key part of considering how to draw down income from KiwiSaver in retirement, of which more here.
An earlier version of this post is here, and a post explaining what is going on with mortality trends is here.
What the numbers show
A cohort life table shows the average mortality experience of a group born in a specific year. For a cohort in which everyone is now dead, we know how many lived to each age. For cohorts born more recently so that some people are still alive, StatsNZ uses estimates of future mortality to complete the cohort experience.
From this data we can chart the distribution of lifespans achieved or expected in a cohort, and calculate indicators such as average lifespan, the median age at death, the most common age at death, and the age to which at least one in five people live to.
For retirement policy and retirement planning, we consider how long people might live while receiving NZ Super (the public pension in New Zealand) or drawing down from KiwiSaver (the private pension). As both NZ Super and KiwiSaver are available from age 65, the indicators of note are those of NZ population cohorts born in different years who survived to age 65 or, in the case of younger cohorts, are expected to do so.
How long will New Zealanders live?
The key charts are here (PDF) for cohorts reaching age 65 in 2023, and twenty years before or after. The 3 cohorts represent current older retirees, those now around the age when most people retire or step back from work, and those probably thinking of retirement in a couple of decades.
The key indicators have not changed significantly from previous estimates, although some of the higher ages expected to be reached have been scaled back slightly. See here for why that is. However, the key messages are consistent with earlier analyses:
- Women, on average, live longer than men.
- Lifespans are getting longer over time. Each generation is expected to live longer than the last.
- Ages at death are becoming more similar but uncertainty in age at death is extending to higher ages.
- Life expectancy, as the average of age at death, is not the only or best indicator of how long life might be.
- For considering longevity risk in retirement planning, relevant indicators are those shown other than life expectancy.
- People in their 40s or older should test their retirement plans for a likely lifespan of 25 to 30 years after age 65 (to age 90 to 95).
What does it mean for me?
A woman reaching her 65th birthday in 2023 (born in 1958) belongs to a cohort which, counting everyone born in the same year, has an average expected lifespan of 83 years. But those who survive to age 65 can expect to live on average to age 88, and half of them to at least age 90. The most common age at death is expected to be 91. Two in five can expect to live to at least age 95.
Improvements continue steadily for younger cohorts, so that a daughter of the woman born twenty years later, on reaching age 65, can add one or two years to each of those indicators. A man of the same ages should reduce the indicators by two or three years.
Individuals will have their own risk factors, known or unknown. Individual longevity experience depends on many risk factors, as well as luck. Longevity risk in retirement planning is when you live longer than how long you expected your money to last. To guard against longevity risk, it is better to give more weight to the right-hand side of these charts than the left-hand side.
Population longevity is only a guide to individual prospects, but longevity is expected to keep on increasing. Keeping up with longevity prospects is an important part of retirement policy and personal retirement planning.
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