How deeply have you sipped from life’s glass? How much is left?
That’s a serious question. Answering it, in a quantitative way, may tell us something about how we should think about, and plan for, our futures. The answer could also give us a framework for thinking about longevity and the issues it presents.
Only a century ago, an early death — in childbirth, childhood and long before old age — was the common fate of most Americans. Today, the problem is longevity. We don’t save enough to pay for our increasing years of life. We don’t want to take care of ourselves or pay the bills for health care later, either. And as if that isn’t troubling enough, we’re just beginning to discover that longevity, like wealth or income, isn’t evenly distributed. Some people live a lot longer than others.
This is well beyond bedtime talk for actuaries. We can find it in recent films. The Hunger Games is all about a rich capital having the power of life or death over the districts it dominates. Elysium is all about the ultimate gated community, a satellite for the very rich with cures for disease that it doesn’t share with the virtually enslaved poor population on a polluted Earth.
We all root for Katniss and Max.
So I’d like to make a suggestion. Let’s see just how much the cup of life holds. If we do that, we have a rough measure of how much we’ve drunk from it if we live to different ages.
How can we do this? We can spend some time examining the Life Tables for the United States. We can see what percentage of the person-years available to Americans we have lived as we age from birth to age 100. (A person-year is one year of life by one person.) This isn’t predictive information for individuals; it simply tells us what the current expectations of life are for a broad group of Americans. It’s reality.
We can get this information from the Centers for Disease Control website. Its tables, constructed by actuaries, estimate what happens to a broad population of Americans from birth to death. Starting with 100,000 births, the tables estimate the total number of person-years of life for the group, the number of deaths each year, and the number of person-years remaining at the end of each year. The same data can be presented as a graph.
Since the table stops at age “100 and over,” the maximum possible number would be 10 million person-years (100 years times 100,000 lives). Even the starting number tells us something: Instead of 10 million, it’s 7,851,473 person-years. That means we’ve now captured 78.5 percent of possible person-years. We can do better, of course, but that figure is a gigantic improvement from the 5,358,122 person-years of 1910 or even the 6,573,625 person-years of 1940. Viewed another way, we’ve gained a stunning 2,493,335 person-years in the last century.
That’s the good news. It’s also the current size of life’s cup. Beginning from a cornucopia of 7,851,473 person-years of life, the remaining person-years decline year by year. By age 100, only a few drops remain: 4,785 person-years. The decline is a big reminder of Jim Morrison’s message: “No one here gets out alive.” Here is what it tells us at different ages:
* By age 40, we’ve used 51 percent of our person-years; only 49 percent remain. Small wonder so many 40-year-olds get “over-the-hill” cards on their birthday.
* By age 65, the beginning of what demographers now call the “young-old” group, we’ve used 78.5 percent of our person-years, with only 21.5 percent remaining.
* By age 75, the start of the “old” group, we have only 11.5 percent of our person-years remaining.
* By age 85, as we enter the “old-old” group, we have used 96 percent of our person-years; only 4 percent remain.
* By age 90, only 1.7 percent of our person-years remain.
* By age 95, only 0.1 percent of our person-years remain.
What do these figures tell us? Interpretations will vary, but the message I get is that people who prefer to eat dessert first are quite reasonable. The glass empties pretty fast. Another message is that a 20-year planning horizon — as in age 65 to 85 — is likely to be a lot more rewarding than a 30-year planning horizon, even if it entails a greater risk of dying broke.
SCOTT BURNS is a principal of the Plano-based investment firm AssetBuilder Inc., a registered investment adviser. His e-mail address is firstname.lastname@example.org.
— Universal Uclick