20th February 2008

Dear Investor,

Will your money last as long as you do?

How long do you expect to live? Before you retire and give up the regular income you're receiving now, you probably need to think about this. You may live longer than you think. Don't be too quick to write off planning for your 100th birthday.

Life expectancy is not a death sentence

Many people have at least some idea about the life expectancies for men and women which are shown in
Table 1.

LIFE EXPECTANCIES AT 2000-02
Current Age
Years Life Expectancy
Your Age If You Reached This Life Expectancy
Women
55
29.9
84.9
65
21.2
86.2
Men
55
25.9
80.9
65
17.7
82.7

Table 1 Source: Australian Government Actuary, 2000-02 Australian Life Tables.

From this information, some people might assume that 55 year-old women will probably die close to 84.9 years, and that it would be lucky or unusual for them to live much beyond it. Thinking this way, 'life expectancy' is seen almost as a death sentence, being roughly the most number of years you could reasonably expect to live, or at any rate the time by which most people will have died. That's wrong.

Your life expectancy means you have roughly a 50/50 chance of living that long. It's obviously not the minimum, but it isn't a maximum either. In fact, on the basis of the mortality rates in the 2000-02 Australian Life Tables, only about 45 per cent of 55 year-old women would be likely to have died by 84.9 years.

Some people will die before they reach their life expectancy, but many will live past it. And the younger you are, the greater the probability that you will survive beyond your life expectancy.

Could your life expectancy be even longer?

You should allow for the possibility that life expectancies will continue to improve. The Australian Government Actuary was asked to come up with some estimates that take into account possible improvements in mortality rates. The figures shown in Table 2 are based on an assumption that mortality rates will continue to improve from 2000-02 at the same rate they improved over the preceding 25 years.

Remember, on average, it is more likely that people at these ages will live beyond the life expectancies shown (if mortality rates behave in line with these assumptions).

ESTIMATED FUTURE LIFE EXPECTANCIES
Current Age
Years Life Expectancy
Your Age If You Reached This Life Expectancy
Women
55
34.7
89.7
65
24.3
89.3
Men
55
31.2
86.2
65
20.9
85.9

Table 2 Source: Australian Government Actuary, 2006.
Note: These estimates take into account the falls in mortality rates that might be expected to have occurred already, together with further improvements that could be experienced over someone's lifetime.

What are your chances of a ripe old age?

At what age is there a 10 per cent chance that you're still alive? You may be surprised by the figures in Table 3.

ESTIMATED 10% PROBABILITY OF SURVIVAL*
Current Age
You Have An Estimated 10% Chance Of Living To
Women
55
103
65
102
Men
55
101
65
101

Table 3 Source: Australian Government Actuary, 2006.

You may want to consider other probabilities of survival in Table 4. (Remember, these are estimates, not certainties.)

ESTIMATED PROBABILITIES OF SURVIVAL TO SELECTED AGES*
Sex
Current Age
Your Chance of Living To Age
75
85
95
Women
55
89%
71%
35%
65
90%
69%
30%
Men
55
82%
58%
24%
65
84%
54%
19%

Table 4 Source: Australian Government Actuary, 2006.
* These estimates are based on the same assumptions as Table 2. Particular assumptions about future mortality rates may not be borne out in practice, and should not be taken to be forecasts.

Hopefully, you've now taken on a new lease on life, and are looking forward to living longer and healthier. Naturally, living longer could have important implications for your retirement plans and the amount of superannuation you will need to fund your retirement.

Source: Australian Securities & Investments Commission


Best regards,
Chris Andrews

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Chris Andrews
Head of Funds Management

t  +61 3 8610 2811
e  candrews@latrobefinancial.com.au

Chris Andrews is the Head of Funds Management for the La Trobe Group and has responsibility for the La Trobe Australian Mortgage Fund.
Read full profile here.










La Trobe is one of Australia's leading independent specialist mortgage Financiers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 115 staff and has raised over AUD$10Billion to assist over 100,000 customers since inception in 1952.

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