Your greatest retirement risk may be something that’s unknowable: how long you will live.
Only 1 in 3 Americans can correctly identify how long a 65-year-old will typically live, according to new research from the TIAA Institute. That has real consequences, as workers who underestimate longevity tend to save less, plan less and risk running out of money in what could be a decades-long retirement, the research arm of financial-services company TIAA found.
“To many, it’s the great ‘how am I supposed to know?’ kind of question,” Surya Kolluri, head of the TIAA Institute, told MarketWatch. “But understanding longevity isn’t optional — it is foundational to retirement security.”
The importance of understanding longevity and your full financial needs in retirement comes as Americans are living longer but face a gap in terms of saving for retirement. The median amount American workers have saved for retirement is just $955, according to the National Institute on Retirement Security. Yet Americans believe they will need $1.46 million to retire comfortably, according to a study by Northwestern Mutual.
“Since Social Security was created, we’ve added 17 years to life expectancy,” Kolluri said. “That’s a lot more time to plan for and to manage.”
When Social Security was signed into law in the 1930s, life expectancy at birth was lower than the retirement age of 65 — roughly 60 years for men and 64 years for women. That life expectancy, however, was heavily skewed by high infant mortality, according to the Social Security Administration; those who made it to adulthood had a greater chance of living longer. Men who made it to age 65 had an average of almost 13 more years to live, with almost 15 years for women, Social Security Administration data showed.
Today, overall life expectancy in the U.S. is an average age of 79, according to the Centers for Disease Control and Prevention. But for those who reach age 65, the average life expectancy is now 84 for men and 87 for women, according to TIAA, based on the 2024 Social Security Administration’s Trustees Report. There’s a 30% likelihood that a 65-year-old man will live at least until age 90, while there’s a 40% likelihood women will do the same, the research found Men tend to underestimate life expectancy, while women’s estimates tend to be more accurate, TIAA found.
While family history may play a role in longevity, personal habits and advancements in medical technology also have added to people’s lifespans, Kolluri said.
“We are not our grandparents. We likely have a different zipcode, a different education, different healthcare opportunities,” he said.