Nice question to get your students engaged in your lesson about saving for retirement. Here’s an interactive from the Actuaries Longevity Illustrator to help answer that question. I created two fictitious high school students, Bill Bradley and Samantha Taggart to demonstrate a potential mini-activity:

After you click “View Results”, you get three charts each of which can be converted into data tables which your students can analyze. Here’s a data table that looks at the probability that Bill and Samantha will live to a certain age:

Questions for your students:

• Who has a longer life expectancy, Bill or Samantha?
• Does the difference between Samantha’s life expectancy and Bill’s increase or decrease with age?
• During what 5 year-interval does Bill’s probability of being alive drop the most? How about for Samantha?
• Finish these statements:
  • Bill has a ____________ probability of living until 90
  • Samantha has a ________ probability of living until 95
• The assumptions that went into this simulation assumed that both young people were non-smokers and in excellent health. Run the same simulation assuming a smoker with average health for each of them.
  • Use the spreadsheet  for the analysis.
  • Students can enter probabilities directly into the spreadsheet.
  • Subtract the Excellent column from the Average column to determine the impact of smoking on the probability of living to a certain age.
  • What did you learn from this exercise?
• Assuming that you work until the age of 65 (typical retirement age), about how many years would you expect to live after that?
• Does this mini-activity make you more or less interested in saving for retirement?

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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