Definition
Life expectancy is the average number of additional years a person of a specified age is expected to live, calculated from a mortality table representing either current mortality rates or projected future rates.
Why it matters
Life expectancy is the most-cited mortality statistic in retirement planning, popular discussion, and policy analysis — and it is also the most routinely misunderstood. Treating life expectancy as a personal forecast rather than a population average leads to systematic under-planning for the longevity tail, which is the structural error that pooled and transferred-risk lifetime income arrangements exist to address.
How it works
Life expectancy at a given age is computed from a mortality table by summing, across all ages at and beyond the entry age, the share of the entry cohort still alive at each age. A period life expectancy uses the mortality rates of a single calendar year for all subsequent ages — it answers the question, "if today's mortality rates held forever, how many more years would the average person of this age live?" A cohort life expectancy uses the actual or projected mortality rates that the birth cohort will experience as it ages — it answers the question, "how many more years will this birth cohort actually average?" For a US female at age 67, the period life expectancy is approximately 19 years; the cohort life expectancy for the same individual is several years longer, because expected mortality improvement adds to her projected lifespan.
In practice
The most common mistake an individual makes with life expectancy is treating it as a forecast of their own lifespan. Life expectancy is a population average; roughly half of people of the same age will outlive it, often by a wide margin. A professional working from life expectancy figures should distinguish median from mean — both are used in different contexts — and should specify period versus cohort. Plan fiduciaries and advisors quoting life expectancy to participants should accompany the figure with the dispersion around it: how many additional years are needed to plan for the upper quartile of survival, and how many for the deeper tail.
In the Longevity Standard Framework
Life expectancy is supporting vocabulary in the Longevity Standard framework. The framework's focal individual configuration (67F) uses a planning age of 90 rather than life expectancy directly — the planning age is set above the median lifespan to reflect the asymmetric cost of planning too low. The framework treats life expectancy as one input to the choice of planning horizon rather than as the operational planning parameter itself; planning horizon risk is the named consequence of conflating the two.
Related terms
- Mortality rate
- Lifespan versus life expectancy
- Survival curve
- Period life table
- Cohort life table
- Healthy life expectancy
- Planning horizon risk
- Longevity risk