Filed Under:Life Insurance, Life Planning Strategies

Gompertz’ Law of Mortality: How Long Must Your Money Last? (AdvisorOne)

The trouble with a retirement plan based on your own life expectancy estimates, writes Moshe A. Milevsky, is that life is random. No one can truly guess how long they'll live, so this method is inherently risky. For another approach, try consulting an equation that's been around since the early 19th century. Benjamin Gompertz was the first to use mortality tables to extract a formal law of mortality. His intense study revealed that a person's probability of dying in the next year increases by approximately 9% to 10% per year, from adulthood until old age. From a mathematical point of view, assuming this line and working backwards, if you start with a species whose “chances of dying” increases by (say) 9% per year, you can invert the relationship and obtain the probability you will survive to any age. That is Gompertz’s equation, and why it is named after him.


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