The (F)Law of Averages

The (f)law of averages challenges a dangerous assumption we see far too often in retirement planning: The use of average life expectancy as a reliable planning target.

The question is: If you make it to retirement - are you already above average - and if that’s true, how do we use that in our planning?

I share six key takeaways from the article:

1. Life expectancy is an average, not a prediction
2. The mode — not the mean — may be more useful for planning
3. Life isn’t neat and tidy
4. Even “complete” life expectancy isn’t safe to use
5. Relying on life expectancy is a planning shortcut — and not a good one
6. The better tool is the survival curve

After that, I answer a listener question: Can you really self-insure for long-term care and use the tax code to make your dollars go further? One listener heard about using the medical expense deduction to offset the cost of care — and wants to know which types of care actually qualify. So, what does qualify?

Resource:

Article by Jeffrey Dellinger in Advisor Perspectives: Life Expectancy: The (F)Law of Averages

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