Planning for the Unknown: The Impact of Longevity Expectations on Retirement Readiness
This article reveals that workers' expectations about how long they'll live in retirement directly influence their saving and planning behavior. Yet many lack longevity literacy—the understanding of how long people typically live after reaching retirement age—putting their retirement security at risk.
Workers who anticipate longer retirements are significantly more diligent about retirement planning and saving than those expecting shorter retirements. Only 48% of workers expecting fewer than 10 years in retirement save regularly, compared to 71% of those anticipating 30 or more years.
These expectations are strongly shaped by workers' perceptions of typical life expectancy at age 65—yet only 33% of U.S. adults can correctly identify this, while 32% underestimate it and 22% admit they don't know.
This poor longevity literacy creates a critical retirement security challenge: workers who underestimate typical lifespans plan with horizons that are effectively "too short," save less diligently, and risk having inadequate financial resources during what may prove to be a lengthy retirement.