High inflation and volatile markets are impeding retirement planning for participants. Now, it looks like a lack of longevity literacy may further hinder any preparation.
According to The Personal Finance (P-Fin) Index, conducted by the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington (GW) School of Business, over one-half of Americans do not have a basic understanding of how long people tend to live in retirement—possibly one of the most significant factors to avoiding longevity risk and outliving retirement savings.
The research surveyed over 3,500 participants on the life expectancy of Americans over age 60. Thirty-seven percent knew the average life expectancy, while 53% said they did not know or underestimated the longevity.
“Longevity literacy is an overlooked factor in addressing retirement preparedness,” said Surya Kolluri, head of the TIAA Institute, in a press statement. “If you don’t have a realistic understanding of how long you are likely going to live, you are missing one of the most foundational components of any plan: a time horizon. If we can improve people’s longevity literacy, we can help create better retirement plans and increase their confidence.”
The findings showed a sizable gap between those who understand longevity and those who do not, as 81% of the former have saved for retirement while working, compared to 57% of those with poor longevity literacy. Additionally, 17% of respondents who understand longevity say they have a lifestyle that falls short of their pre-retirement expectations, while 37% of those with low literacy said the same.
Women rank higher in longevity awareness
One stark discovery highlighted a stronger understanding of longevity in women compared to men, who have traditionally ranked higher in financial literacy compared to women. Women beat men by 9%, with 43% of women demonstrating deeper longevity literacy versus 32% of men.
Men were also likelier than women to underestimate life expectancy, with 31% of men underestimating longevity for 60-year-olds compared to 19% of women.
The study explains the reasoning behind the difference, noting that traditional, patriarchal households have long halted women from understanding their own finances. However, the study says that since women have been more influential in healthcare decisions, this may have helped their longevity literacy. It’s also worth knowing that numerous studies show time and time again that women generally live longer than men.
When it came to generations, Baby Boomers and the Silent Generation demonstrated stronger knowledge, approximately 45% of each compared with about 30% of Gen Z and Gen Y.
Additional findings from the study can be found here.
SEE ALSO:
- Market, Longevity Risk Are Top Concerns For American Workers
- What is Relational Health and Longevity, and Why Should Advisors Care? RLS 2022
- Women Fail Financial Literacy Test, Want Help
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
