8. Retirement Age

Retirement ages should be pegged to 10 years less than whatever the life expectancy of a person is at age 50. For example, if an average 50-year-old male is expected to live for another 26.4 years, his total life expectancy at age 50 would be 76.4 years. By subtracting 10 years from 76.4 years, we arrive at a retirement age of 66.4 years, which is about 66 years and 5 months. Upon reaching age 66, this new retiree could expect, not just 10 years, but about 15 more years of life because the average remaining life expectancy for a person at age 66 is naturally longer than it is at age 50. People should plan to fund 20 years of their retirement, which is a point significantly past their expected life expectancy. Therefore, this individual would need to have planned for 20 years of retirement, until he reaches the age of 86.4 years. People who live past their planned 20 years of retirement and who own below a certain low threshold of assets, would have their expenses funded fully by the government.

So that planning can be made a little more predictable, this retirement age figure should be calculated, perhaps every 5 or 10 years rather than every year.


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