When should I use each life expectancy method?

Both methods are equally effective in helping to determine if a client’s goals are affordable and achievable, and can be used on the same plan for what-if comparisons around each principal’s life expectancy.

The End of Life method can be very useful in cases where a principal’s life expectancy may be fairly certain, such as an illness, and you want to help a spouse or partner plan for this unfortunate event.

The Actuarial method is a widely-accepted planning approach for a discounted cash flow model like the Household Balance Sheet where a lifetime of cash flows are discounted back into today’s dollars. Instead of making an assumption about when a person may die and, thus, when certain cash flows from income resources or spending goals associated with that person may come to an end, we model those cash flows out to the person’s maximum age as determined by actuarial tables and then apply a survival probability haircut to each year’s cash flows.