PLANADVISER - November/December 2022 - 10

trends
The news that drives the retirement
plan adviser industry
Miscalculated Longevity Risk
Americans'
projections
about their own
life expectancy
often miss the
mark, which can
create problems
as to at what rate
they'll be able
to spend when
planning their
retirement and
lifestyle goals.
THERE IS mixed news for many retirees.
" According to the Society of Actuaries,
about 43% of retirees underestimate their
own life expectancy by at least five years, "
says Kate Beattie, senior retirement income
strategist with Capital Group. " We know
that Americans are living longer than ever
before, and everyone seems to know that
except for investors. "
There is no universally accepted cause
for underestimation. Research from Rawley
Heimer at Boston College has found that
the accuracy of estimations varies with age
and flips from underestimation to overestimation
as people grow older. People in their
20s, for instance, overestimate mortality
risk due to concern over dying from events
that are statistically rare. In contrast, older
people-Heimer cites the example of a
78-year-old cohort-tend to overestimate
how long they are likely to live.
Underestimation's Impact
Beattie maintains that it is important to
estimate the investor's planning horizon
reasonably accurately because a mismatch
will influence retirement spending and
lifestyle decisions. If investors plan for too
long a life span, they likely will live more
frugally than necessary. But if they underestimate
too much,
they risk depleting
their funds prematurely, Beattie says.
Underestimation can lead to excessively
conservative investment portfolio allocations,
says Matthew Eickman, national
retirement practice leader with Qualified
Plan Advisors. " [People] become focused
on the shorter term, which leads them to
be more conservative from an investment
perspective, " he says.
The result is a loss of purchasing power
relative to inflation, he says. " What we've
seen is that, as life expectancies have
10 | planadviser.com November-December 2022
Art by Miriam Martincic

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PLANADVISER - November/December 2022

Table of Contents for the Digital Edition of PLANADVISER - November/December 2022

Built to Last
Cyber Ready
Measure Your Footprint
Determinants of Profitability
Keep a High Profile
Strategic Moves
The Value of a VCOC
Retroactive Compliance Reviews
Sheri Fitts
PLANADVISER - November/December 2022 - Cover1
PLANADVISER - November/December 2022 - Cover2
PLANADVISER - November/December 2022 - 1
PLANADVISER - November/December 2022 - 2
PLANADVISER - November/December 2022 - 3
PLANADVISER - November/December 2022 - 4
PLANADVISER - November/December 2022 - 5
PLANADVISER - November/December 2022 - 6
PLANADVISER - November/December 2022 - 7
PLANADVISER - November/December 2022 - 8
PLANADVISER - November/December 2022 - 9
PLANADVISER - November/December 2022 - 10
PLANADVISER - November/December 2022 - 11
PLANADVISER - November/December 2022 - 12
PLANADVISER - November/December 2022 - 13
PLANADVISER - November/December 2022 - 14
PLANADVISER - November/December 2022 - 15
PLANADVISER - November/December 2022 - Built to Last
PLANADVISER - November/December 2022 - 17
PLANADVISER - November/December 2022 - 18
PLANADVISER - November/December 2022 - 19
PLANADVISER - November/December 2022 - 20
PLANADVISER - November/December 2022 - 21
PLANADVISER - November/December 2022 - Cyber Ready
PLANADVISER - November/December 2022 - 23
PLANADVISER - November/December 2022 - 24
PLANADVISER - November/December 2022 - 25
PLANADVISER - November/December 2022 - Measure Your Footprint
PLANADVISER - November/December 2022 - 27
PLANADVISER - November/December 2022 - 28
PLANADVISER - November/December 2022 - 29
PLANADVISER - November/December 2022 - Determinants of Profitability
PLANADVISER - November/December 2022 - 31
PLANADVISER - November/December 2022 - 32
PLANADVISER - November/December 2022 - 33
PLANADVISER - November/December 2022 - Keep a High Profile
PLANADVISER - November/December 2022 - 35
PLANADVISER - November/December 2022 - Strategic Moves
PLANADVISER - November/December 2022 - 37
PLANADVISER - November/December 2022 - The Value of a VCOC
PLANADVISER - November/December 2022 - Retroactive Compliance Reviews
PLANADVISER - November/December 2022 - Sheri Fitts
PLANADVISER - November/December 2022 - Cover3
PLANADVISER - November/December 2022 - Cover4
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