What You Need to Know
- A federal agency says overall U.S. life expectancy at birth peaked at 78.9 years in 2014.
- Life expectancy fell by a whole year between 2019 and early 2020.
- One wrinkle is that the trends for commercial financial services clients are different from the trends for the general U.S. population.
Life insurers will have to prepare for the possibility that the life span of life insurance policyholders, annuity holders and pension plan participants could fall.
U.S. life expectancy at birth increased, or at least stayed the same, almost every year from 1943 through 2014.
Insurers, actuaries and personal financial advisors have acted on the assumption that the key risk most family breadwinners and retirement savers face is longevity risk — the risk that retirees will live longer than expected and use up their assets.
But between 2014 and 2015, something changed: Possibly because of the opioid epidemic, overall U.S. life expectancy at birth fell to 78.7 years, from the 2014 peak of 78.9 years.
Life expectancy at birth stayed the same or fell every year for the next three years.
The National Vital Statistics System, the arm of the National Center for Health Statistics that compiles U.S. birth, death and life expectancy statistics, changed its methods for calculating life expectancy in 2018. Life expectancy then crept up to 78.7 years in 2018, and to 78.8 years in 2019.
The average life expectancy for 65-year-olds fell to 19.1 years, from 19.5 years in 2018.
Players in the insurance and pension communities are wondering whether the pandemic has mostly shortened the lives of frail people, leaving the country with a healthier population overall, or whether the pandemic has hurt the survivors’ health enough to shorten their life expectancy.
We’re interested in hearing from you. How do you see the U.S. life expectancy trends? Let me know what trends you’re spotting this week at [email protected].
Elizabeth Arias, Betzaida Tejada-Vera and Farida Ahmad, health scientists, National Center for Health Statistics
Provisional life expectancy at birth in the first half of 2020 was at its lowest level since 2006 for both the total population (77.8 years) and for males (75.1), and the lowest level since 2007 for females (80.5).
Life expectancy for the non-Hispanic Black population, 72.0, declined the most, and was the lowest estimate seen since 2001 (for the Black population regardless of Hispanic origin). The Hispanic population experienced the second-largest decline in life expectancy (79.9) reaching a level lower than what it was in 2006, the first year for which life expectancy estimates by Hispanic origin were produced (80.3). The levels observed for the non-Hispanic white population were last seen in 2005 for the white population (regardless of Hispanic origin).
Another consequence of the decreased life expectancy estimates observed in the first half of 2020 was a worsening of racial and ethnic mortality disparities. For example, the gap in life expectancy at birth between the non-Hispanic Black and white populations increased by 46% between 2019 and the first half of 2020 (from 4.1 to 6.0 years).
Regardless of Hispanic origin, life expectancy for the Black population has consistently been lower than that of the white population, but the gap between the two races had generally been narrowing since 1993, when it was 7.1. The gap of 6.0 observed in the first half of 2020 is the largest since 1998.
Conversely, the gap between the Hispanic and non-Hispanic white populations decreased by 37% between 2019 and the first half of 2020 (from 3.0 to 1.9 years). This indicates that the Hispanic population lost some of the mortality advantage it has evidenced since 2006 relative to the non-Hispanic white population, despite experiencing generally lower socioeconomic status,
The provisional life expectancy estimates presented in this report are subject to important limitations. First, they are based on deaths that occurred in the first six months of the year and do not reflect the entirety of the effects of the COVID-19 pandemic in 2020, or other changes in causes of death, such as the increases in provisional drug overdose deaths through early 2020.
There is seasonality in death patterns in any given year, with winter months typically seeing more deaths than summer months, and this is not accounted for in the data.
Second, the COVID-19 pandemic differentially affected certain geographic areas in the first half of 2020. The life table estimates may disproportionately represent mortality in those regions, which are more urban and have different demographic characteristics than areas affected by the pandemic in the latter part of the year. As a result, life expectancy at birth for the first half of 2020 may be underestimated since the populations more severely affected, Hispanic and non-Hispanic Black populations, are more likely to live in urban areas.
Sam Gutterman, consulting actuary
There are significant uncertainties concerning future U.S. longevity.
It is important to note that our population is quite heterogeneous, with a wide range of mortality risk characteristics and behaviors. It is the long-term aggregation of the effects of many of these factors that influence longevity. So, many observations regarding the “average” U.S. person fail to capture our true future longevity. For example, overall the last several decades those with “higher” socioeconomic characteristics have benefited from improved mortality, while those with “lower” socioeconomic characteristics have not.