How Long Do You Expect to Live? Getting It Wrong Could Cost You in Retirement

Why It Matters

Underestimating life expectancy drives chronic under‑saving, jeopardizing retirees’ financial security and increasing systemic longevity risk for pension plans.

Key Takeaways

• Two‑thirds misjudge retirement longevity
• Underestimating lifespan reduces savings rates
• Women better estimate life expectancy than men
• Adding ten years to plans improves outcomes
• Younger workers prioritize current expenses over longevity

Pulse Analysis

The TIAA Institute’s latest survey reveals a stark gap in public understanding of post‑65 life expectancy. While the average 65‑year‑old man now lives to 82‑83 and women to 85, only 33 % of respondents correctly identified this range. This misperception translates into concrete financial behavior: individuals who anticipate a brief retirement are markedly less likely to contribute regularly to retirement accounts, and when they do, contributions often fall below 5 % of income. The resulting longevity risk threatens both personal wealth and the broader retirement system.

Behavioral factors amplify the knowledge gap. Men are more prone to underestimate lifespan than women, likely because women’s caregiving roles expose them to health trends. Younger adults, especially those in their 40s and early 50s, juggle competing priorities—childcare, education costs, and elder care—making long‑term retirement horizons feel abstract. This short‑term focus depresses savings discipline and discourages professional financial planning, creating a feedback loop where limited preparation reinforces the belief that retirement will be brief.

Financial advisors and policymakers can mitigate the issue by reframing longevity expectations. Simple heuristics, such as adding an extra decade to the planning horizon, help individuals build buffers against unexpected longevity. Educational campaigns that highlight updated life‑table data for those already 65 can correct the bias. Moreover, integrating longevity risk modules into employer‑sponsored retirement tools encourages higher contribution rates and more robust withdrawal strategies, ultimately safeguarding retirees against outliving their assets.