How long can Indians realistically expect to live? This was the subject of a heated debate on Twitter after this article on the great Indian retirement challenge was published last week.

Retirement calculators show that a person who retires today at 60 and wants to fund monthly expenses of ₹50,000 until the age of 90 will need a corpus of about ₹15.3 crore. If you trim that life expectancy to 80, the corpus needed will drop to ₹10.7 crore.

Assumptions on how long you can expect to live are important not only for retirement planning but other financial decisions as well. You will need an estimate of longevity, to decide the kind of annuity to purchase, the length of term insurance cover you need, the healthcare fund you need to build, and many other decisions.

Official estimates

So, what would be a realistic life expectancy assumption for an Indian investor?

Official life expectancy data for India is sourced from the Office of the Registrar General which records all births and deaths. Every year, the government publishes this data in its National Health Profile.

The latest such document, published in January 2023, noted that the life expectancy at birth for the average Indian was 69.4 years in the 2014-2018 period. The life expectancy for men, at 68.2 years, was lower than that for women at 70.2 years.

But this is the number of years the average Indian can expect to live, at the time of his or her birth. Given that India has material infant mortality, the life expectancy for adults who have survived to a certain age is more relevant to financial planning.

The India Ageing Report 2023 published by the International Institute for Population Sciences and the United Nations estimated that the life expectancy at 60, was 17.5 years for men and 19 years for women in the years from 2015-2019. This effectively means that if you survive until 60, men can expect to enjoy an average longevity of 77.5 years and women to 79 years.

But like any other statistic in India, this average hides a lot of variation. Folks in States such as Punjab, Maharashtra and Tamil Nadu had higher longevity than those in less affluent ones such as Uttar Pradesh and Bihar. Men and women at 60 could expect to live until 79-82 in States such as Punjab, Maharashtra and Tamil Nadu. In Uttar Pradesh or Bihar, though, men and women had to budget for lower longevity of 76 to 78 years.

Before using these numbers in your financial planning calculations, though, there are other adjustments to make.

One, given India’s large and diverse population, national averages on most statistics do not apply to the affluent population. For instance, hardly any folks reading this column would be earning an income of just ₹2.12 lakh a year. But this is India’s per capita income in FY24. If you earn over ₹6 lakh a year, you are likely to be in the top 25 per cent of the population. Given that longevity is often linked to your lifestyle, nutrition and access to healthcare, you need to budget for higher longevity if your income is well above the average.

Two, genetics and heredity carry a material weight in deciding longevity. So, if your parents and grand-parents are well into their eighties or nineties, it is best that you too budget for similar longevity.

Three, life expectancy in India has been improving over time. In the 43 years from 1975 to 2018, average life expectancy improved from about 50 years to 69 years, roughly an increase of 0.45 a year. Therefore, young folks planning to retire, say, 20, 30 years hence will need to add a few years to their longevity estimates.

Finally, in financial planning exercises such as calculating your retirement fund, it is better to save up more than you need, than to under-budget and fall short in your sunset years. Any surplus funds can anyway be passed on as a legacy to your dependents.

What it means

The above findings have some implications for your personal finances.

Though official longevity statistics suggest that men need to budget for a longevity of 77 and women 79 years, it would be safer to assume a longevity of 85 years in financial planning calculations. If you are young and have many years left to retirement, you should stretch that to 90.

Women need to factor in higher life expectancy and build up a bigger retirement corpus than men.

Joint life annuities, where the survivor continues to receive a pension after the policyholder’s passing, are more useful for men than women.

With the break-up of joint families and children migrating, most folks of this generation need to reconcile themselves to living alone or just with their spouses at the fag end of their life. This argues for acquiring an owned home in a good locality with access to healthcare or a unit in a retirement community, by the time one turns 60.

Finally, healthcare expenses tend to rise disproportionately with longevity. But ironically, health insurance covers are either impossible to buy or turn prohibitively expensive beyond the age of 70. Health insurance also doesn’t cover the cost of medication on lifestyle ailments, outpatient treatment or nursing services, which tend to make up the bulk of healthcare costs after 60. This argues for us to supplement our retirement fund with a healthcare fund built out of our savings, which can be used to cover these costs.