Most Americans don't know how long an average retirement lasts

Most Americans don't know how long an average retirement lasts
Clients want to talk about retirement planning, so let's start with one of the basics.
AUG 22, 2023

When a client talks to their financial advisor about retirement, they want to be assured that they won’t run out of money, but it’s likely they won’t know how long it needs to last.

That’s because there is a significant lack of knowledge about the life expectancy of a retiree in the United States today, and some people may be shocked at the number of years that their investments and savings will be expected to stretch.

The TIAA Institute and the Global Financial Literacy Excellence Center at the George Washington University School of Business used data from the 2023 Personal Finance Index survey to assess the ‘longevity literacy’ of American adults.

Respondents were asked to identify the likelihood among 65-year-olds of living to 90 and the likelihood of dying relatively early (by age 70) - only 12% got both correct.

For men, there is a 30% chance of living to 90 and a 10% chance that they will not live beyond 70. While for women there’s a 40% chance of living to 90 and less than 5% chance of dying by 70.

Asked how long they think a 65-year-old is likely to live, just 35% correctly said 84 for men and 87 for women.

WHY IT MATTERS

The research found that having strong longevity literacy helps with retirement readiness:

  • 50% have determined how much they need to save for retirement, compared to 32% of those with weak longevity literacy.
  • 72% are saving for retirement on a regular basis, compared to 58% of those with weak longevity literacy.
  • 69% are confident about having enough money to live comfortably throughout retirement, compared to 53% of those with weak literacy.

[Read more: Calculating retirement savings target]

"Longevity literacy is particularly important since retirement income security inherently involves planning, saving and preparing for a period that is uncertain in length," said Surya Kolluri, head of the TIAA Institute. "Our research clearly demonstrates a lack of longevity literacy among the vast majority of U.S. adults. Improving this can promote better retirement security and mitigate longevity risk."

Latest News

Northern Trust names new West Region president for wealth
Northern Trust names new West Region president for wealth

The new regional leader brings nearly 25 years of experience as the firm seeks to tap a complex and evolving market.

Capital Group extends retirement plan services further with a focus on advisors
Capital Group extends retirement plan services further with a focus on advisors

The latest updates to its recordkeeping platform, including a solution originally developed for one large 20,000-advisor client, take aim at the small to medium-sized business space.

Why RIAs are the next growth frontier for annuities
Why RIAs are the next growth frontier for annuities

David Lau, founder and CEO of DPL Financial Partners, explains how the RIA boom and product innovation has fueled a slow-burn growth story in annuities.

Supreme Court slaps down challenge to IRS summons for Coinbase user data
Supreme Court slaps down challenge to IRS summons for Coinbase user data

Crypto investor argues the federal agency's probe, upheld by a federal appeals court, would "strip millions of Americans of meaningful privacy protections."

Houston-based RIA Americana Partners adds $1B+ with former Morgan Stanley director
Houston-based RIA Americana Partners adds $1B+ with former Morgan Stanley director

Meanwhile in Chicago, the wirehouse also lost another $454 million team as a group of defectors moved to Wells Fargo.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.