The Australian Bureau of Statistics’ (ABS) life tables are misleading and “dangerous to use” when providing financial advice to retirement aged Australians, according to the founder of the life expectancy service My Longevity.
Speaking to Money Management, David Williams, chief executive of My Longevity, said life expectancy could be misleading for most clients.
According to the ABS 2018-2020 tables, for a 65-year-old, the average remaining life expectancy for females was 23 years while for males it was 20.3 years.
But, Williams explained, “if you use that number, you’ve got big problems because only a quarter of 65-year-olds are likely to fall within three years of that number which means that three quarters of them aren’t. Further you don’t know whether a person is close to average or not.
“As we age, we become more different from each other, and average now might not be average in a few years’ time.”
Since the turn of the century, a vast amount of research had fuelled a focus on what factors would combine to provide a more useful approach to assessing a person’s longevity, according to Williams.
Williams, who had more than two decades of experience in financial services, launched his My Longevity service about 14 years ago. Throughout this time, Williams regularly refined his service which had now been used by almost 250,000 people.
“The whole aim was to ask people a series of questions about themselves and use their answers, to provide an indication of their life expectancy, the potential stages of wellbeing remaining and why they might be different from average.”
He said the information could then prompt people to take more informed action about their longevity and decide with their advisers – on a regular occasion - on the timeframe to be used to underpin health, financial and estate planning decisions.
Williams said the Government and industry should focus more on providing individuals with relevant longevity information to encourage behaviour that addressed long-term health, employment and social issues which would ultimately decrease Government spending and improve general wellbeing.
“We really can do much more as a community and as individuals to benefit from the increasing longevity bonus we are experiencing,” he said.