Question:
How do you think life expectancy of a 60-year-old will increase over the next 20 years? And is this expectation matched by the mortality projection models that you use?
Answer:
In our recent Risk of Living Longer survey, we asked respondents how they expected life expectancy of a 60-year-old to increase over the next 20 years. Most predicted more than a 2-year increase in life expectancy.
Strikingly though, the common actuarial projection models used in the US, UK and Canada all project life expectancy increases for a 60-year-old of between 1.3yrs and 1.9yrs over the next 20 years.
The chart below shows the responses to our recent Risk of Living Longer survey (a survey of the audience of our Risk of Living Longer webinar series).
Key takeaways
- No respondents thought that life expectancy would be lower than today.
- 58% of respondents believe life expectancy will improve by more than 2 years.
- Even when we restrict the results to responses from actuaries, we see more people predicting increases of more than 2 years.
The key questions are:
- Are we comfortable with the improvements reflected in the actuarial projection models we are using?
- Have we developed an over-reliance on model output, without stopping to think about what they actually mean?
- How should pension and insurance systems prepare for uncertainty around future longevity?