I just learned that someone I know passed away from COVID-19. He was a successful small business owner in my town and an all around nice 51 year old family guy. I started to think about how we all try to be nice and successful. That and plan to eventually retire and live a long life. I’m thinking out loud, questioning the prospects for a long life. Will COVID-19 change actuarial longevity and retirement planning? Even if official actuarial longevity doesn’t change, with how badly unprepared the world and the USA was for this Coronavirus event, let alone coming disasters associated with climate change, should we even be planning to live much beyond the age of 70? 

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Should COVID-19 Change Actuarial Longevity and Retirement Planning?

We are doing everything we can to avoid the virus but we have to face reality. It will never just disappear so infection is inevitable. Our chances only improve if we can avoid infection long enough for a vaccine to be available, successful treatments are developed, or at very least if infected and it’s severe it happens on the down side of the hospitalization curve. Even with access to hospital care there is no guarantee of survival. 

At some point this Coronavirus will punch us all and the older we are the harder it hits. Many people will be infected during the peak. Then not only are the risks of higher COVID-19 fatality rates for the plus 60 crowd still in play, but also the impacts of the critical medical care survival decisions that are being formalized. I live in the state of Colorado and they just released their COVID-19 patient care guidelines. I’m sure other states are doing the same. It clearly shows that when it comes to the nuts and bolts regarding who gets a ventilator or other scarce treatment for a chance to fight for their life, age will be considered during hospital shortages. The older you are the lower down the list you go. 

They will use a version of the Charlson Comorbidity Index.

Index Source-  (Screengrab from the Colorado Department of Public Health and Environment’s website)

I suppose in this situation you have to make a cut somewhere. We’re all on the COVID-19 Titanic and there aren’t enough lifeboats. Beyond this current crisis there’s no reason to think any future mass event would be handled differently. There will never be enough lifeboats for everyone. But why wouldn’t our retirement planning now have that factored in? It’s no longer unreasonable for anyone who survives this pandemic to consider that the whole country or world can be hit with something again, either natural or unnaturally man caused. When it happens we will all be older too, adding to our life’s expendability factor. 

Looking At Actuarial Longevity Numbers

It was a big enough bummer to contemplate and plan for longevity when thinking we could live into our late 80s or 90s. Looking at the Social Security longevity calculator and plugging in my birth date comes up with their figure of age 82.7. I thought that was far more realistic than age 90, but they always tell us to plan for a long life. I’m wondering how realistic any of that is now. I did have a retirement plan to cover us until age 90. Not that I wouldn’t try to make it to that age if it was up to my own behaviors. But now I feel that regardless of our own actions the decision can be out of our hands the closer we get to our actuarial number. 

There has always been the chance of an earlier death because of things like drunk, high, or distracted drivers; cancer, crime, sharknado, etc. But it somehow feels elevated now. 

That’s why I’m now questioning retirement planning as far as longevity goes and I’m not the only one.

Some actuaries are already discussing longevity hits and CODID-19 impact to annuities and pensions. While others are focusing on how the Coronavirus death rate will impact the healthcare and life insurance side of things. What I have yet to see is anything from the retirement planning side. Too soon? Maybe, but I have a lot more free time these days to think out loud and wonder about things. 

The impacts of a shorter life span on our retirement plan. 

The good news- 

Early retirement may take much less money to pull off. It also means if reaching your mid 70s is about all there is then there may be less reason to wait beyond age 62 to collect Social Security. One less thing to worry about.

The bad news- 

We have to get busy to clear our bucket list because our ticket to leave the planet would get punched sooner than we wish to consider. 

It sure would make saving enough for early retirement easier to reach and pursuing FIRE an even easier decision to make. For those already on FIRE, losing 30%-50% of our portfolio in a COVID-19 market collapse wouldn’t be as painful either. Live less, need less.

There should be no surprise that just playing with FIRECalc will show how numbers drastically change with planning for a shorter lifespan. Taking a worse case scenario of an additional 40% loss to my portfolio shows the difference when using my existing spending budget. Age 75 came in at 100% success rate while age 90 came in at 77.7% to 95% depending on when I showed our Social Security would start.. 

What I’m Doing About It

The market has been up and down since the world stood still. It feels a lot like 2008 that way. There will be no surprise if it endlessly keeps doing this or even falls to a new lower floor until a vaccine is available. They say that is still 12 to 18 months off. I’m fortunate in that I have enough cash in my portfolio to go at least that long. Lucky me, in this Coronavirus pandemic my cash bucket might last longer than I do. 

I’ve made sure our Beneficiary designations, Will, and PoA are up to date.

If we had not already gone through the process of having a legal Will and POA drawn up we sure would be busy now getting that done the best we can. Not sure if family law lawyers are considered essential service during the pandemic shutdown. Online options may be one’s only recourse. 

I am not making any changes to anything in my retirement plan yet. 

I’m just waiting this out doing what I can to remain virus free. I am going to hang onto this thoughtline regarding COVID-19 being a longevity threat as a way to cope with any major portfolio losses that may still be ahead. I’ll need less than initially planned once I’m convinced that we will likely die younger than our 90s. Although, I never really thought that we would make it to 90 anyway. There will just be less left behind.

What I will do is pray that the death rate drops way off and the vaccine or treatment comes quickly. 

If not, then I’ll keep an eye on the actuarial expert’s appraisal of longevity. Any changes to lower life expectancy in the actuarial tables may suggest a positive change in people’s pension and Social Security payout. Something that could possibly change one’s retirement planning.

But what I really hope is to avoid the virus and be around to see how they roll out the vaccine once it’s available. 

My dream is the vaccine is found and will be readily available for everyone in an expedited and orderly fashion before the next pandemic round. If it comes with highly limited availability and goes like the handling of Coronavirus testing, or to the WH staff and their donors first (sorry, I’m cynical when it comes to these guys lately), and then rolls out using the way of scarce ventilator guidelines, I will make some lifestyle choices and retirement funding changes while I wait my turn. Something more befitting a shorter lifespan due to being classified as more expendable now and most likely even more expendable going forward for the next cluster-fetch. 

Perhaps I’ll start with an investment into the pleasures of single malt scotch. I might as well enjoy myself while being pushed to the back of the line. I would rather head down to the bar on the Titanic than cling to a side rail in panic during my last moments on the planet. 

Update 4/29/20: Anyone who experiences job loss due to the pandemic can check a new estimated stimulus unemployment benefit calculator. Zippia analyzed each state’s unemployment policies to determine how much unemployed workers can expect to receive under the coronavirus stimulus by state and salary. Remember, in addition to state level benefits, unemployed workers now receive an additional $600 a week for the next 4 months regardless of income. (The calculator is not a paid or sponsored link)