Overview
Main Menu Name: Life Exp.
Determines single life and joint life expectancy statistics and probabilities. Since many financial and estate planning problems involve planning for the tax and financial consequences of death, these statistics and probabilities provide important information for designing optimal plans. The results are also useful for illustrating to a client and a client's advisors the urgency of action.
In this article:
Background
In many cases, a planner could design nearly perfect financial and estate plans for you if he or she knew exactly when you would die. But since no one has that knowledge, estate and financial planners typically make plans based on expectations of probabilities, i.e., what is likely to happen in the "average case."
Mortality statistics based on the longevity of large numbers of people can provide strikingly accurate guidance as to what is the average remaining life expectancy for an average person at a given age. Of course, no real person is "average" and factors such as one's family history of longevity, current and past health problems, occupation, avocation, and lifestyle should all be factored into any plans that are dependent on how long one lives. The use of life expectancies  that is the use of mathematical probabilities provides a starting place, a frame of reference for making important decisions  and once found, reasonable adjustments can be made to suit the calculations to a specific person.
Since much of financial and estate planning is conducted for married couples, both single life and joint life expectancy statistics and various relevant joint life probability statistics are illustrated.
A word about the mortality tables upon which our actuarial longevity probabilities are based: One of four mortality tables were used for computing the life expectancy and probability statistics: (1) the 2000CM table (2) the Sec. 1.401 (a) (9) table (3) the 90CM table (4) the 80CNSMT table, and (5) the Sec. 1.72 table.
The Sec. 1.401(a)(9) table and Sec. 1.72 table can be found in those sections of the tax regulations, and both are derived from the experience of companies that sell annuity contracts. People who choose to invest in annuities are usually healthier than the population as a whole, and so tend to live longer than people of the same age in the population as a whole. As a result, these mortality tables tend to show longer life expectancies than the tables based on census results (which are based on the population as a whole). The Section 72 table is the IRS table for determining the expected return for annuity contracts and the exclusion ratio for the recovery of cost basis in an annuity contract. The Section 401(a)(9) table is newer and is used for the purpose of determining the minimum required distributions from IRAs and qualified retirement plans, as well as early retirement distributions under section 72(t). Both tables are useful when you need life expectancy statistics for people who are healthier than average for their age and who are considering the use of annuity type products to meet their financial goals.
Table 80CNSMT, Table 90CM and Table 2000CM are IRS mortality tables used for determining the gift and estate tax values of various component interests in property. Table 80CNSMT is used for dates prior to May 1, 1999. Table 90CM is used for dates prior to May 1, 2009 and later than April 30,1999. Table 2000CM is used for dates after April 30, 2009. For dates May 1, 1999 through June 30, 1999, Table 80CNSMT or Table 90CM may be used. Since the tables are used to value both life interests and remainder interests, they must be basically neutral, neither favoring nor discriminating against one component interest (e.g., a life interest) over another (e.g. a remainder interest). Consequently, life expectancy and probability statistics based on the tables are more representative of the population as a whole than those based on the Section 72 table. The tables are most useful when you want life expectancy statistics for the "average" case; that is, for a person who theoretically has been pulled at random from the population as a whole with no self selection bias for either longer than average or shorter than average longevity.
All the mortality tables discussed above are "unisex tables." That is, for policy reasons, the mortality statistics were designed to reflect the experience of both males and females. Although differences in male and female mortality have diminished in recent years, they have not been entirely eliminated and therefore to some extent adjustments may be made to increase "accuracy."
If you wish to generate life expectancy and probability statistics that more accurately reflect sexbased mortality factors, you can adjust the ages in the following manner:
 Increase the age of a male by 2 years and
 Decrease the age of a female by 4 years. Although these adjustments will not exactly correct for the actual sexbased factors, for most ages (less than age 95) the life expectancy statistics generated by this program will differ from actual sexbased life expectancy statistics by less than onetenth of a year.
Getting Started
If people knew when they were going to die, they could probably devise close to perfect financial and estate plans. Since no one knows when they will die, financial and estate plans are often based on expectations of what is most likely to happen.
Mortality statistics are often used as a reference to estimate the average remaining life expectancy of an average person at a given age. Mortality statistics are based on the longevity of a large group of people. While these statistics are a useful reference tool, keep in mind two things:
 There is no "average" on which to base average life expectancy that actually exists.
 Longevity is affected by many factors (lifestyle, occupation, health problems, family history of longevity, etc.)
Married couples make up a large portion of the individuals involved in financial and estate planning. Therefore, the calculation provides life expectancy statistics for joint life as well as single life. Additionally, various joint life probability statistics are calculated.
This calculation model uses five mortality tables to calculate life expectancy. Probability statistics are built in to the calculation. You select which table to use in the calculation. The tables are Table 2000CM, the Sec. 1.401 (a) (9) Table, Table 90CM, Table 80CNSMT, and Section 1.72 Table.
All of these mortality tables are unisex tables; their mortality statistics include results from males and females. While differences in male and female mortality have decreased in recent years, a slight difference still exists. Calculation results will more accurately reflect sexbased mortality statistics if the following adjustments are made:
 If the calculation is for a male, increase the age by 2.
 If the calculation is for a female, decrease the age by 4.
Entering Data
 Select a Mortality Table: Select one of the following life expectancy tables.

 Select the 2000CM Mortality Table (2009) to use the mortality table from the 2000 census that is used for gift and estate tax valuations from May 2009 onward.
 Select the 80CNSMT Mortality Table(1980) to use the mortality table from the 1980 census that is used for gift and estate tax valuations from May 1989 through April 1999.
 Select the 90CM Mortality Table(1999) to use the mortality table from the 1990 census that is used for gift and estate tax valuations from May 1999 through April 2009.
 Select the Section 1.401(a)(9) Mortality Table(2002) to use the life expectancies used for minimum required distributions from IRAs and qualified retirement plans.
 Select the Section 1.72 Mortality Table(1983) to apply the life expectancy table used for annuity calculations.
 Two Life Calculation: Select this check box to calculate for two lives. If this check box is not selected, the Individual Statistics for only one person are performed, and the Second Age input field does not appear.
 First Age: Enter the age of the first person as of his closest birthday.
 Second Age: Enter the age of the second person as of his closest birthday. This entry field will not appear if the Two Life Calculation check box is not selected.
Results
If you select Two Life Calculation: The calculation results show three sets of life expectancy and probability statistics. These sets are Individual Statistics, Joint & Survivor Statistics, and First Death Statistics and can be viewed by clicking on the desired tab. Each set of results is displayed on a separate screen that can be viewed by clicking on the appropriate tab.
If you do not select Two Life Calculation: Only the Individual Statistics results are calculated and displayed. See Individual Statistics to understand the results.
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