Clients in some states may face a pleasant problem: They are likely to live about 0.7 years longer than residents in a typical state.
The National Vital Statistics System has given actuaries and advisors new data for addressing the longevity risk challenge in two important new reports: United States Life Tables, 2019 and U.S. State Life Tables, 2019.
The United States report shows what’s happening at the national level, to expectation of life at many different ages, including age 20, 65 and even 100.
The state report provides similar data, broken down by state.
Life expectancy at birth increased slightly between 2018 and 2019, to 78.8 years, from 78.7.
A figure that may be more useful to the typical financial advisor, life expectancy at age 65, rose to 19.6 years, from 19.5. Life expectancy at age 100 held steady at 2.2 years.
At the state level, 2019 life expectancy at age 65 ranged from 17.5 years, in Mississippi, up to 20 or more years, in nine states.
For a look at the five states with the highest life expectancy levels at age 65, see the gallery above.
For data for all 50 states and the District of Columbia, see the table below.
NVSS is the arm of the Centers for Disease Control and Prevention that counts births and deaths.
The 2019 reports may seem as if they come from another world, because they reflect what was happening in the world before the COVID-19 pandemic changed everything.
But Social Security administrators, Medicare administrators, insurance company actuaries, and the software companies that develop life and income planning tools for financial advisors will all include the NVSS data in their own reports, calculation and software.
Life insurers, commercial software companies and advisors will supplement the data with comparable but different reports from other sources, such as Club Vita and other actuarial data vendors, reinsurers, the Society of Actuaries and life insurers’ own experience data.
Models built on NVSS data can help advisors estimate how much life insurance clients need and how long they might need to make income and assets last in retirement.
The data streams may also have complicated, indirect effects on clients’ finances.
Insurers may use the data, along with many other sources of data, when assessing the profitability of blocks of business, setting prices for new insurance policies and annuity contracts, and deciding whether to raise any prices that are adjustable for holders of policies and contracts that are already in force.
The data could also affect giant corporate transactions, such as private equity firms’ moves to acquire large blocks of annuity business from the original issuers, or mergers involving two large public companies with defined benefit pension plans left over from the 1980s.
A typical financial services client may have education, income and asset levels far above the median, and clients using products such as annuities and long-term care insurance often know that they come from long-lived families. That means advisors and their toolmakers will have to add socioeconomic status adjustments to clients’ life expectancy estimates.
The COVID-19 pandemic has led to sudden, uneven, hard-to-predict changes in longevity.
But experts hoping that the effects of the pandemic will ease soon, thanks to improvements in vaccination programs and treatments, and that life expectancies will once again look something like what’s in the 2019 life tables.
How to Use the Data
Unlike commercial data streams, the NVSS streams come free from copyright restrictions.
That means advisors can use the data to:
- Develop their own mortality and longevity risk models, and run their own calculations.
- Create infographics and reports.
- Post their infographics and reports on LinkedIn, Facebook, Twitter, Instagram, their own websites and elsewhere online.
- Write about the data in articles for local newspapers and magazines.
- Look for opportunities to talk about the data on radio and TV talk shows.
- Organize in-person panel discussions to review the data.
Life Expectancy at Age 65, by State, in 2019
|State||Life Expectancy at Age 65 (in years)||Change (in %)|
|District of Columbia||19.6||19.9||+1.5%|
(Image: Black Salmon/Shutterstock)