A new study found that most Americans do not know how long they expect to live, alarming researchers who say the lack of "longevity literacy" could mean many who believe they are prepared for retirement may run out of funds in their golden years.
The TIAA Institute and George Washington University's Global Financial Literacy Excellence Center's 2022 Personal Finance Index asked for the first time in the survey's history whether respondents knew the life expectancy of Americans who are currently 60 years old, as a multiple choice question. The correct answer is age 82 for men, and 85 for women.
Most Americans either do not know or underestimate how long they will live, according to a new study. (iStock / iStock)
Only 37% answered correctly. More than half – 53% – either said they did not know the answer or underestimated how long they were projected to live by six years.
Those results point to a problem when it comes to retirement planning, according to researchers, who note that a person cannot accurately plan how much they need to save if they are not even aware of how long their savings will likely need to last.
"The people who overestimate and the people who get it right behave quite similarly in terms of saving for retirement," GFLEC academic director Annamaria Lusardi told FOX Business, noting that the data shows that having "longevity literacy" increased the likelihood that respondents were on track with their retirement savings.
A new study shows people who know their life expectancy are also more likely to be financially prepared for retirement. (iStock)
Those who accurately answered the life expectancy question were more likely to save for retirement while working, and were also much more likely – 40% versus 25% – to respond that they were confident they will have enough money to live comfortably in retirement.
Another notable finding in the study was that there was a gender gap both in knowing life expectancy and in financial literacy.
Women were more likely to have longevity accuracy (43%) than men (32%), but men's financial literacy was stronger.
Another notable finding in the study was that there was a gender gap both in knowing life expectancy and in financial literacy. (iStock) (iStock)
Surya Kollari, head of the TIAA Institute, says this finding could change how the industry has been approaching retirement planning conversations and indicates the importance of financial advisers meeting with both spouses in a household to address longevity considerations as part of their discussions – along with caregiving needs, long term care, and health care costs.
"We know that women live longer and are potentially more likely like to be widowed or not have a partner later in life," he explains, but says more women have lower financial security at retirement than men. He emphasized, "[Women] live long, but they need help as well."