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Practice Management

The Language of Longevity: How Understanding Prompts Action

Financial literacy, financial wellness, and now …longevity literacy.

It’s the latest phrase in the fight to raise awareness of—and preparation for—later-in-life issues, financial, medical, and otherwise, and an idea the TIAA Institute hit upon during its research.

“When we think about financial literacy, that’s been a conversation that has been had for many years,” Surya Kolluri, who leads the institute, said. “As we were doing our research here, we said, ‘Can we test another kind of literacy and then follow the thread based on how people respond to it?’ We identified this term longevity literacy.”

He and the team asked respondents about their life expectancy knowledge, not of themselves individually, but of the associated probabilities and statistics surrounding the discipline. For example, what is the life expectancy among 60-year-old men and women in the U.S.? A simple mortality table average is 85 years old for women and 82 years old for men.

“However, we didn’t want to just give a blank quiz for respondents, so we gave them some options that seemed reasonable, and they would then pick one,” Kolluri explained.

Predictably, only 37% of the respondents identified the correct answer, and 28% said they didn’t know, even given answer options.

“If it was a blank response and they said they didn’t know, it would be understood, but they were given choices and still said they didn’t know,” he marveled.  
Additionally, a quarter of respondents underestimated life expectancy, and a 10th overestimated their life expectancy, revealing a wide distribution in the answers.  

A-ha Moment

What surprised Kolluri most about the longevity literacy responses he calls an a-ha moment, something that first needed context.  

“When we administer the financial literacy question, we find women lag men in law in financial literacy, women lag men in financial confidence, and women lag men in how quickly they build investment confidence. With longevity, that pattern flipped.”

Fully 43% of women demonstrated longevity literacy compared with 32% of men, an 11-percentage point and 34% percent, which is significant. While claiming to need more research on why he offered three potential reasons. The first involves household decision-making and who deals with financial issues versus health care issues.

“I might postulate that perhaps the female in the household is closer to healthcare decisions,” Kolluri said.

The second involves the household caregiver, for either parents or in-laws, which in older generations typically is more female than male.

“The third reason is that if we agree actuarially that women live longer than men, then they’re thinking about grandma outliving grandpa and mom outliving dad, just in your own life experience,” he added. Bundle all these things together, and intuitively I could explain why this is the case.

Whether an increase in awareness leads to an increase in confidence and action is an interesting question. TIAA research found 81% saved for retirement while working, compared to 57% of those with poor longevity literacy; again, a significant difference. And 54% of those with higher longevity literacy tried to calculate the overall amount they needed to save, compared to only a third with poor longevity literacy.

“So, there are two actions here already,” Kollouri explained. “One, they tried to calculate how much, and two, they’re actually saving. We also found 40% were confident about having enough money, compared to only a quarter with low longevity literacy. So, we got some interesting data points on those three fronts.”

He claimed that it all boils down to a need to reframe the thinking around retirement. It’s not only about whether or not they’ve saved enough for retirement but, given the longevity considerations he mentioned, have they set themselves up for income to last a lifetime?

“The chances that one spouse might outline the other is pretty high, obviously,” he concluded. “We should be thinking about the longevity of one of the two spouses. Are we securing income, so it’s not just about accumulating assets but also having a lifetime income that supports us during retirement?”