Original Research

Real age-adjusted life expectancy

Duncan Palmer, Niel Krige
Journal of Economic and Financial Sciences | Vol 6, No 1 | a281 | DOI: https://doi.org/10.4102/jef.v6i1.281 | © 2018 Duncan Palmer, Niel Krige | This work is licensed under CC Attribution 4.0
Submitted: 27 June 2018 | Published: 30 April 2013

About the author(s)

Duncan Palmer, University of Stellenbosch Business School, University of Stellenbosch, South Africa
Niel Krige, University of Stellenbosch Business School, University of Stellenbosch, South Africa

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Abstract

This study summarises the development of a model to determine an individual’s adjusted life expectancy based on his Real Age. The model incorporates aspects such as gender, residing province, income, HIV status, ethnic background, weight, exercise, family illness history, stress, substance abuse and diet. Predicting life expectancy is vital in retirement planning for two reasons: 1) given the diverse nature of South Africa, the national average life expectancy cannot be applied to everyone; and 2) retirement duration forms a vital part in the retirement planning process. Retirees can make more informed financial investment decisions based on their Real Age, thus increasing the probability of having sufficient funds during retirement. Three representative examples of South African Real Age-adjusted life expectancies were simulated, predicting life expectancies of 67, 72 and 87 years, notably different from the 50 year average South African life expectancy.

Keywords

life expectancy; pension planning; real age; survival probability

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