Sunday, January 15, 2006

later life expectancy

People who reach the advanced years of life have good news ahead, according to several sources. These include, perhaps surprisingly, the Internal Revenue Service, which has developed a longevity table as part of payout schedule for annuities to guide individuals in their income tax calculations.
Whether they rely on the IRS or someone else, individuals should be pleased to learn that they can disregard average life expectancy figures (now age 75) when they reach age 50 because new life expectancies take over as the years go on. For example, anyone born in 1925 had a life expectancy of 59 years at the time of birth, but if they beat the averages and survive to age 65 they will fall into a new life expectancy table because people at that age have a known life expectancy of about another 20 years. Recent figures on later life expectancy are as follows:

These Internal Revenue Service figures appeared in Table V, p. 47, of IRS publication #575, in 1988. They provide a useful guide for planning pay-outs from annuities, pension options, IRA, and Keogh plans because the chances are even that one will reach the average for one's age group (men should subtract about three years from and women add three years to the foregoing life expectancy tables).
Although age 65-the year of retirement with full benefits under Social Security --does not show on the table, the average 65- year-old can expect to live about another 20 years, and can set up withdrawals or pension payments to reflect that fact. If a male age 65 has a spouse aged 60, then he might set up a withdrawal plan that reflects her life expectancy - 24.2 years - rather than his own.
Tucker, E. "How Long Must You Plan For?" United Retirement Bulletin, 14:5 (May 1988, Issue 157).


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