Can winning an Oscar really increase your life expectancy?
As the countdown to the annual Oscar ceremony begins, talk turns to who will win this year’s coveted best actor and best actress awards. Not only will these Oscar winning celebrities be showered with praise and admiration from their peers and the wider world, according to a survey carried out in 2001 (“Survival in Academy Award–Winning Actors and Actresses”), they’re also likely to live around 3.9 years longer than their fellow actors who do not receive an Oscar. Yet another reason for us mere onlookers to be jealous of the rich and famous then? Well, maybe not!
Five years later, in 2006, Marie-Pierre Sylvestre, at McGill University, re-analysed the 2001 data and published a paper concluding that, although Oscar winners do live slightly longer than non-winning actors, the increase in longevity was only about a year, and, therefore, not statistically significant.
So where does that leave us, less thespian, mortals?
When we talk about life expectancy we usually mean the expected number of years a person has left to live. The Office of National Statistics (ONS) regularly reports on life expectancy at birth, a widely used and easy to understand figure but one which may not be telling us the full story.
In its latest bulletin on the Health state life expectancies in the UK: 2014 to 2016, the ONS included two additional measures of longevity for the very first time – the median and modal ages at death. But why?
The answer lies in the fact that these alternative measures provide additional information on longevity patterns over time and may be more helpful for individuals when it comes to deciding how much they need to save for their retirement and how long they might need their money to last for.
What is the difference between the mean, median and modal age at death?
The mean is the most commonly used measure of life expectancy. It’s the average number of years a person is expected to live for before his or her death. The median, on the other hand, estimates the age at which half of a hypothetical group would’ve died and half would still be alive. Finally, the mode identifies the age at which the highest number of deaths occur in the group.
According to the ONS, if age specific mortality rates observed in the period 2014 to 2016 were to continue into the future, males born in the UK in 2014 to 2016 will expect to live on average 79.2 years (mean age at death). However, half of this group will expect to still be alive at age 82.3 years (the median age at death) and this group’s most common age at death is expected to be 86.4 years (the modal age at death). The equivalent mean, median and modal ages at death for females were 82.9 years, 85.8 years and 88.9 years. Quite a disparity between all three ages!
What does this mean for those saving for retirement?
When it comes to calculating how long your money will need to last for in retirement, historically, the focus has largely been on the mean life expectancy. But, as we’ve seen above, the variation between the different measurements used to calculate life expectancy can be as high as seven years for men and six years for women.
Clearly, many of us will need to rethink our retirement investment strategy, as we may have got longer to live than we might initially have thought. Care needs to be taken around income drawdown and money management to make sure that individuals do not run out of money in retirement. Many online solutions are currently available to help. EValue’s Pensions Freedom Planner tool can help identify median retirement ages – giving a 50% chance or 25% chance of a 65-year-old living to a particular age. Our longevity API, available for developers to use, also utilises the median.
In addition, issues also surround annuity comparisons. The current mindset of the financial services industry is one that says that a level income is required throughout an individuals’ retirement. However, this is almost certainly not the case in reality, where usually there is a period of high activity followed by low activity. Providing annuity comparisons which are based on a particular individual’s health or lifestyle may help to deliver a better outcome for many.
Whilst many statistics focus on a specific age of death, life expectancy is transitory and the older we get the longer we’re expected to live. We, therefore, need to regularly check that we’re on the right track with our savings and alter our investment strategy gradually whenever we need to. After all, according to the ONS, a 65-year-old man alive today may be expected to live to around 83.5 and a man who makes it to age 90 can expect to live to age 94. Now that is surely worthy of a lifetime achievement award at the Oscars!