‘Staggering’ Number of Adults Don’t Know How Long Retirements Last

John Sullivan

Compounding the problem of low financial literacy is “low longevity literacy,” or a lack of understanding of how long people tend to live in retirement.

According to new research from the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business (GWSB), a staggering number of Americans display low longevity literacy, which hinders retirement planning and saving.
They found that less than 40% of adults correctly identified the average lifespan at retirement age.

“Longevity literacy is particularly important since retirement income security inherently involves planning, saving, and preparing for a period that is uncertain in length,” Surya Kolluri, head of the TIAA Institute, said in a statement. “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.”

The researchers said there is a link between high longevity literacy and overall retirement readiness. Considering the responses from people still working who have strong longevity literacy, they found that:

• 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 regularly, 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.

Findings are similar to those with strong longevity literacy who have already retired:

• 77% say their current lifestyle meets or exceeds their pre-retirement expectations, compared to 62% of those with weak literacy.
• 82% say they are confident they have enough money to live comfortably throughout their retirement, compared to 69% of those with weak literacy.

“Unfortunately, poor longevity literacy cannot be improved by simply providing people with information. Terminology is an obstacle,” Annamaria Lusardi, University Professor at The George Washington University and GFLEC’s Academic Director, added. “For example, only one-third of adults understand the practical implications of the term “life expectancy.” On the other hand, one-quarter think that “life expectancy” is the age by which the vast majority of a group of people will die. So simply providing information is not enough, we have to do more to teach about these important concepts.”