You’ll probably live far longer than you think – and the implications are huge

What is the most important number you can think of? Your bank balance? Your mortgage? US GDP or the FTSE 100? All of these are important but the one number you should be very focused on is a guess of your own life expectancy. Get that wrong and the chances are you will get a life that isn’t as good as it should be. It’s a crucial number for your finances, your education and your career.

Thinking about your own mortality is hard for emotional reasons. Basing projections on your parents is also problematic given each generation on average lives longer than the previous. Over the last 200 years, life expectancy at birth has increased at a near constant rate of two to three years every decade. That means each generation on average lives around six to nine years longer than their parents. However there is debate about what all this means for the future.

One group (let’s call them the “levellers”) argues that we can effectively expect no further increases. With the diseases of prosperity such as obesity and diabetes, we may even see this go into reverse.

Another group (let’s call them the “extrapolators”) argues that the trend is set to continue due to major improvements in healthcare and survival rates for those 70 or older. According to this group, the trend is likely to continue, although possibly at a declining rate (the oldest person ever was Jeanne Calment who lived for an extraordinary 122 years and 164 days).

Finally, there are “the accelerators” who believe scientific knowledge is poised to make dramatic improvements such that soon people will live beyond the 120-year barrier, with some even arguing that the first person to live to 500 has already been born.

If demographers and scientists tell us that our life expectancy is somewhere in the range of 80 to 500, what does government say? There are two ways of stating life expectancy – a period and a cohort measure. The period measure starts with the assumption that the levellers are correct, so that a child born in 2014 in effect lives their whole life medically in 2014. In other words, when they reach 50 in 2064 they will have the same survival rates as a 50 year old in 2014.

In contrast, the cohort measure assumes the extrapolators/accelerators are correct and projects forward gains in life expectancy. For the UK, we can compare the period estimates of 79.3 for a boy and 83 for a girl with the central projection for cohorts born in 2014 of 90.4 and 93.2. The ONS also produces an “optimistic” scenario, more consistent with the past trend of life expectancy increasing two or three years every 10, of 102 and 105. It’s worth stressing that these are average life expectancy numbers – because the median is now above the mean, it’s actually the case that for more than 50 per cent of people the number is even higher.

So what does all this mean for you? Given the historical trend, you have a high chance of living six to nine years longer than your parents. As a result, children born today have a realistic chance of living to more than 100 (more than a third according to the ONS). But basing guesses of life expectancy on that of your parents or published period estimates is likely to serve as an underestimate and leave you unprepared. That’s a problem governments face too given that long-term budget projections are made based on period and not cohort life expectancy.

Given this potential longevity, much needs to change socially. A life designed for 70 and 80 years is not easily stretched to 100. How long you work for, who we consider to be young and who old, the age at which we start a career, get married, have children or get educated will change. All these are already changing and we can expect them to shift markedly in the future.

The financial implications of a longer life are also substantial. It’s not just that we will need to work and/or save more but the products we will need will change. We will hit milestones at different ages and need new more flexible life-time products. There are also major risks to deal with, such as preparing ourselves for possible major future increases in life expectancy or protecting ourselves against the costs of longer periods of disability.

Society has only just begun to adapt to these trend increases in longevity. Focusing on possible estimates of your own life expectancy, taking stock of your financial and non-financial assets, and actively engaging in life planning will be how each of us begins this process ourselves.

Andrew Scott is co-author, with Lynda Gratton, of The 100-Year Life: Living and Working in an Age of Longevity, published by Bloomsbury Press today.