As any life insurance salesman can attest, death is rarely (never) a pleasant subject, but a new survey from the Society of Actuaries reveals just how bad we are at predicting our own demise—weird, but true.
Attempting to determine the age at which it will happen certainly makes sense, given high-profile concerns over longevity, a supposed retirement crisis, as well as paltry savings and assets that many of us will easily outlive.
The SOA reported that half of consumers misestimate their life expectancy by five or more years, with 23 percent overestimating and 28 percent underestimating.
“This can have major implications on retirement preparedness, with those who underestimate their life expectancy facing a greater risk of outliving their financial assets and experiencing financial stress in retirement, while those who overestimate may not prepare properly for the care of financial dependents in the future,” according to the research.
Who’s better with their predictions about passing on?
The survey found:
- Respondents estimated a median life expectancy of 85 years. However, according to the Actuaries Longevity Illustrator tool, the sample in this study has a median life expectancy of 87.2 years.
- Women are more likely to underestimate life expectancy (63 percent) than men (46 percent).
- Those without a college degree are more likely to underestimate life expectancy (58 percent) compared to those with a degree (47 percent).
- People with over $100k in income are more likely to overestimate life expectancy (54 percent) compared to those with less income (42 percent).
- There were significant portions of the population who considered themselves healthy even though their responses to questions regarding lifestyle and other longevity factors may suggest otherwise.
- Even after respondents were exposed to specific questions regarding key drivers of life expectancy and survival probability, only 19% changed their initial estimates. This suggests more education is needed regarding the documented connection between those lifestyle and health drivers and longevity.
“The most important finding of this study is that 51% of the U.S. population misestimated their life expectancy by at least five years—either too high or too low,” the SOA noted.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
