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Author: RHinCT Big gold star, 5000 posts Ticker Guide SC1 Red Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35387  
Subject: Re: Funding Retirement Date: 10/5/2012 10:22 PM
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Charlie,

Good post, but I think it could be a bit better in one aspect.

Studying the SSA's actuarial tables is certainly interesting. I think the analysis has to be taken at least one stage deeper than the odds table presented in your post. That list is the odds at the time of birth. Not many of us have much reason to work from that basis, since we are all variously older than that.

Lets take a male at age 60 as an alternate frame of reference for an example. The original table you linked to has a column that starts with a population of 100,000 and then, for each age, gives the part of that expected to reach that age. For our hypothetical 60 year old that is 85,227. THAT is the basis that person should calculate from. So lets look down that column for half of 85,227 (42613.5). That turns out to be somewhere between 81 and 82, rather than 79. Change to another hypothetical male who is 70 years old and his basis is 72,066 and half of that (36033) falls between 83 and 84. Calculate for a guy who has already made it to 80 and his 50/50 point is between 87 and 88.

(Yes, I know there is a "Life expectancy" column in the chart. I like the confirmation from performing an alternate calculation that proves to me I understand what I am looking at.)

Anyway, I think the analysis in the rest of your post (good stuff!) should be adjusted for each individual based on their own age rather than using calculations based on age zero, which leaves everyone short of their actual expectancy.

RH in CT
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