TimeMAPS™

Theme 2.0 – Basic Life Planning

Student Activity

Life Expectancy - Student Activity

Name / Life Expectancy Student Activity – SA0200A1
Prerequisites / Complete Lesson 2.1 – The Three Phases of Life
Estimated Time / ½ hour
Activity Resources / Converting Units of Time handout – CUOfT.pdf
Objectives / 1.  Reinforce the concept of Life Expectancy
2.  Introduce a potential problem with using the concept of Life Expectancy when doing Life Planning
3.  Introduce a way to overcome the potential problem introduced in #2

Life planning is the formal process of planning for the life events that will happen in the future. You can establish goals you want to accomplish such as when you will complete your education, get married, have children and retire. Essentially, you are estimating when major life events will occur in your life so you can prepare for them.

As you have probably guessed, a very important part of life planning is time. How much time do you have to complete your education? How long do you have to work so you can retire at a specific age? How many years will you spend in retirement?

Since time is so important, it is also important to understand how much time you have to work with. Because we are mortal, we have a finite amount of time on this earth to accomplish our goals.

Most people use the concept of life expectancy to estimate the total amount of time they have to work with. Life Expectancy is an estimate of how many years you can reasonably expect to live based on government statistics. Most people will divide their life expectancy into logical segments called life phases and estimate how much time they have in each phase. Each life phase can then be analyzed to estimate when major events will occur during that phase.

Before you can do any Life Planning, you must first determine how many years you must plan for. The following table shows the current single life expectancy for individuals up to 21 years of age and is used by both the government and many businesses to estimate an individual’s life expectancy.

Table A

Single Life Expectancy - Age 0 to 21 Years

Age

/ Life Expectancy (yr) /

Age

/ Life Expectancy (yr)
0 / 82.4 / 11 / 82.8
1 / 82.6 / 12 / 82.8
2 / 82.6 / 13 / 82.9
3 / 82.7 / 14 / 82.9
4 / 82.7 / 15 / 82.9
5 / 82.7 / 16 / 82.9
6 / 82.7 / 17 / 83.0
7 / 82.8 / 18 / 83.0
8 / 82.8 / 19 / 83.0
9 / 82.8 / 20 / 83.0
10 / 82.8 / 21 / 83.1

Based on IRS Publication 590 (2011)


Use your current age and Table A to complete Table B below.

Table B

Personal Life Expectancy

Item /
Value
Your Life Expectancy (yrs)
Your Age (yrs)
Difference (yrs)

You could simply use your life expectancy from above, but not everyone lives to be his or her exact life expectancy. You could live much longer than the value above. In fact, advances in medicine and technology have increased the average life expectancy in the United States over the years. Research shows the average life expectancy in the United States has increased by about 110 days per year since the early 1900’s.

Assuming this trend continues in the future, your life expectancy could increase significantly and living longer than your planning means you will probably outlive your money. The number one fear of people who have retired is running out of money during their retirement. Realistically, you should adjust your life expectancy to account for future advances in medicine and technology.

Most experts don’t expect the average life expectancy to continue increasing by 110 days a year simply because of the great strides that have already been made. The increase in future years is expected to only be ½ of past years, but knowing this means you can adjust your life expectancy to account for advances in medicine and technology.

55 days = 110 day/yr x ½ or .5

The following formula can be used to calculate how much you should adjust your life expectancy to account for the increase in average life expectancy in the future.

Adjustment = Years x 55 days/yr ÷ 365 days/yr

Where

Adjustment = # of years to increase life expectancy

Years = #3 from Table 2.1.2

Use the formula above and the information in Table B to calculate your adjustment and complete Table C. Show your adjustment calculation in the space provided.

Your Calculations

Table C

Adjusted Life Expectancy

Item / Value
Your Age (yrs)
Original Life Expectancy (yrs)
Adjustment (yrs)
Adjusted Life Expectancy (yrs)

SA0200A1 Copyright © REMTECH, inc. All rights reserved… Updated: 2/2012

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