Americans' longevity illiteracy puts retirement at risk, finds new research

The number of Americans living to 100 is projected to quadruple by mid-century, but the financial planning required to support such long lives is lagging dangerously behind, according to new joint research from Nationwide and the American College of Financial Services.

Dubbed the “Century Club” study – a nod to data from the US Census Bureau projecting that the number of American centenarians going from 101,000 in 2024 to roughly 422,000 in 2054 – the initiative reveals that a longer life can sharply escalate the risk of outliving retirement savings – especially when financial strategies don’t adjust accordingly.

The research found that extending retirement by just five years, from 30 to 35 years, increases the risk of depleting their nest egg by 41 percent based on historical returns. That figure balloons to over 300 percent when using lower projected 10-year portfolio returns.

“Too many people underestimate how long they’ll live – and that blind spot can seriously undermine their financial security,” Michael Finke, professor of wealth management at the American College and co-author of the study, said in a statement announcing the findings.

According to a companion survey conducted by the Nationwide Retirement Institute, just 29 percent of respondents said they want to live to 100. The hesitation stems largely from concerns over declining health and the affordability of extended retirement. Around three-quarters of Americans surveyed fear their money won’t last as long as they do.

The findings come at a time of increased economic pressure. Inflation has forced 40 percent of non-retired Americans to consider delaying retirement, further complicating the financial calculus. Yet despite the heightened awareness of economic challenges, only 48 percent of respondents consider longevity in their investment planning.

The disparity is particularly pronounced when it comes to life expectancy knowledge. Only 26 percent correctly estimated how long a 65-year-old man is likely to live, according to the joint study.

A parallel report from the TIAA Institute and the Global Financial Literacy Excellence Center found similar issues among younger demographics. That research, based on the 2024 Personal Finance Index, revealed that 26 percent of millennials expect to spend 30 or more years in retirement – but don’t plan to extend their working lives accordingly. For every one-year increase in expected lifespan, millennials add only about one month to their expected retirement age.

“The findings in this report underscore a critical issue – many Americans are approaching retirement planning with limited knowledge of how long they are likely to live,” said Annamaria Lusardi, economist and academic director at GFLEC.

TIAA’s data also show just over one-third (35 percent) of adults underestimate the average life expectancy of a 65-year-old, while another 24 percent say they don’t know. Four in 10 respondents couldn’t answer a single question correctly about basic longevity statistics.

Still, there are signs of optimism. The Century Club survey suggests that learning about longer lifespans prompts many people to change behavior: 67 percent of respondents said they would increase savings, 58 percent would adopt a healthier lifestyle, and 63 percent would take steps to reduce debt, which is becoming increasingly difficult to shake off for Americans in their golden years.

“We consistently see that those who plan for longevity feel more confident about retirement,” Finke said. “The key drivers of that confidence? Working with an advisor, having access to guaranteed income, and building a plan that’s designed to last.”

Yet despite growing interest in financial tools that can provide lifetime income – such as annuities and long-term care insurance – adoption remains limited. Nearly one-third of consumers in Nationwide's research agree such products would help prepare them for a longer life, but only 10 percent own long-term care coverage, and awareness of annuities continues to trail demand.

“For so many people, understanding how long they can potentially live during retirement is among the biggest barriers to attaining retirement security,” said Kourtney Gibson, CEO of retirement solutions at TIAA. “Workers need to think about how to maximize savings during working years.”