Don't skip saving just because “people can die at any time, so it's happier to spend the money early”; about 90% of 30-year-olds live to 60

Cost

Free. What you do is, when the thought “anything could end tomorrow anyway” comes up, first think about your own chance of reaching 60. The hard part is that the people around you all say it, and the thing you want to buy is right in front of you.

What you get

First, how long people live. The World Health Organization's Global Health Observatory has a 2023 life table for China. A life table estimates how long a group of people will live, based on that year's death rates at each age. By this table, the chance that a 30-year-old reaches 60 is 92.0% (men 89.2%, women 94.9%). Reaching 65 is 87.4% (men 83.0%, women 92.0%). Reaching 80 is 55.6% (men 45.8%, women 66.1%). These three sets of numbers were calculated by dividing the numbers of people still alive at each age in the table. Someone who reaches 65 can expect on average another 17.5 years. Next, how people estimate it themselves. A 2019 study in The Journal of Finance (《金融学杂志》) ran a questionnaire asking people to estimate how long they would live. The result was that young people underestimate their chance of staying alive, and older people overestimate it. An earlier working paper gave an example: a 28-year-old man's actual chance of living another 5 years was 99.4%, while he estimated it at 92.8%. The authors put the probabilities people estimated themselves into a standard model of how people save and spend over a lifetime. Compared with using the actual death rates, young people save 26% less, and retired people spend down their savings 27% more slowly. The more skewed a person's estimate of life and death was in the questionnaire, the more skewed their saving was, even after accounting for risk preference, cognitive ability and family circumstances. One reason the authors give is that people give too much weight to rare, vivid ways of dying.

Notes

There are several reasons it is graded B. The life table is a World Health Organization model estimate, not a figure published by the National Bureau of Statistics. The “26% less saved” comes from a model, not from following real people. The life-and-death estimation finding comes from a single study, and there is no comparable data for people in China to cite. The size of the benefit is rated medium, following the same approach as §6.23 (don't expect buying things to improve your mood). The money not saved could reach the tens of thousands of CNY, but no number shows what it buys back, so it is not rated large. The same study also found that older people go the other way, overestimating how long they will live and spending their savings too slowly, so this item is written mainly for young and middle-aged people. This does not argue against spending on things and experiences you like; it only blocks the one reason “I'm going to die anyway.” If an accident or serious illness does hit, what helps is an emergency fund and insurance; see §5.27 (emergency fund) and §5.39 (insurance for losses you can't absorb). If someone at home depends on your income, see §5.40 (term life insurance). If you place orders when you feel low, see §6.23 (buying things to improve your mood). The one who benefits is you.

Evidence grade

B : Supported by research but without a precise number, or based on small or single studies.

Sources

1. World Health Organization, Global Health Observatory. Life tables: lx - number of people left alive at age x, China, 2023（指标 LIFE_0000000031）. https://ghoapi.azureedge.net/api/LIFE_0000000031?$filter=SpatialDim%20eq%20'CHN'%20and%20TimeDim%20eq%202023
2. World Health Organization, Global Health Observatory. Life tables: ex - expectation of life at age x, China, 2023（指标 LIFE_0000000035）. https://ghoapi.azureedge.net/api/LIFE_0000000035?$filter=SpatialDim%20eq%20'CHN'%20and%20TimeDim%20eq%202023
3. Heimer RZ, Myrseth KOR, Schoenle RS (2019). YOLO: Mortality Beliefs and Household Finance Puzzles. The Journal of Finance, 74(6), 2957-2996. https://doi.org/10.1111/jofi.12828
4. Heimer RZ, Myrseth KOR, Schoenle RS (2016). YOLO: Mortality Beliefs and Household Finance Puzzles. SSRN 工作稿（28 岁男性那个例子出自这一版）. https://doi.org/10.2139/ssrn.2749543

Translated from the Chinese original. Original book, section 6, tip 32. Content may be out of date and rules differ by place. When you actually deal with an agency, a doctor or a court, follow what local officials, doctors and lawyers tell you. Disclaimer