How Long Does Retirement Last? Most of Us Don’t Know

Try your hand at this one-question quiz: How much longer is a 65-year-old American woman likely to live?

A) About 17 more years, to age 82

B) About 22 more years, to age 87

C) About 27 more years, to age 92

Only about one-third of us know the correct answer, which is B, according to a new report from TIAA Institute, the research arm of the financial services nonprofit.

Longevity literacy runs short among American adults, the survey found, and that knowledge gap has dire implications for our retirement.

The average American will live about 78.4 years, according to federal data on life expectancy.

But life expectancy rises with age. A man who turns 65 today can expect to live another 19.3 years, reaching age 84, according to a Social Security life expectancy calculator. A woman of 65 will live 21.9 more years, on average.

The longevity numbers reported by the CDC, the ones we learn in school, are calculated at birth. But life expectancy goes up from there. Simply put: The longer you do live, the longer you will live.

Most Americans don’t know how long retirement lasts

Not many of us understand that basic concept of longevity. As adults, most of us don’t know how much longer we are likely to live. And we tend to guess low.

In the TIAA survey, which reached 3,371 adults in January, only 33% chose the right answers to multiple-choice questions about life expectancy for a man and woman at age 65. Of the rest, 32% picked the lower number, while 13% picked the higher one, and 22% said they didn’t know.

There’s an obvious link between how long you are going to live and how long your retirement is going to last. People who underestimate their own life expectancy tend to plan for a shorter retirement. And that can be a costly mistake.

In the TIAA survey, people who underestimated life expectancy also predicted they would have a relatively short retirement. More than half of that group said they expect to live fewer than 20 years after retiring.

That estimate is also probably too low.

The average American worker retires at age 62, according to to survey data from the Transamerica Center for Retirement Studies.

A man who retires at 62 can expect to live roughly another 21 years, according to longevity data. A woman is likely to live longer than that.

What’s the right length for a retirement plan?

Retirement planners routinely counsel their clients to plan for a longer-than-average retirement. Why? Because your retirement plan needs to cover every scenario, including the one where you or your spouse lives to age 95.

“Life expectancy is a fundamental component of retirement planning that societally we’ve shied away from too long,” said Catherine Collinson, CEO of the Transamerica Center.

“The real risk is running out of savings,” Collinson said.

Americans fear outliving their savings as much as any other potential retirement setback, including failing health, according to research from the Transamerica Center.

Another 2025 survey, from Allianz Life, said Americans fear running out of money more than death itself.

Indeed, roughly 40% of American households are “at risk of not being able to maintain their standard of living in retirement,” based on finances and life expectancy, said Anqi Chen, associate director of savings and household finance at the Center for Retirement Research.

Many financial planners assume a 30-year retirement. If you retire at 62, that plan would cover expenses until age 92.

Americans who expect a retirement of 30 years or longer are more likely to save for retirement, and they’re apt to save at higher rates, the TIAA report found.

“If people are longevity-literate, they think about their savings more, they save more and they feel better about the outcomes,” said Surya Kolluri, head of the TIAA Institute.

Millennials and Generation X lack longevity literacy

The TIAA survey found that mid-life Americans, millennials and Generation X, have a particularly poor grasp of longevity: 36% of millennials and 37% of Gen-Xers underestimated how long a 65-year-old man or woman is likely to live, compared to 26% of baby boomers and 21% of Silent Generation Americans.

Men are more likely than women to underestimate life expectancy, the survey found.

Kolluri suspects that Americans closer to retirement, or those already retired, have “sharper” views on longevity. As for the gender difference, he cites the traditional role of women as caregivers.

“The proximity to the subject provides one a better understanding of life expectancy,” he said.

When Americans underestimate life expectancy, Kolluri said, they often fall back on subjective measures: Their own health issues, or the age at which their parents or grandparents died. But life expectancy tends to rise with successive generations, thanks to advances in medical care and healthier lifestyles.

“You are not your grandparents,” he said.

This article originally appeared on USA TODAY: How long does retirement last? Most of us don’t know

Reporting by Daniel de Visé, USA TODAY / USA TODAY

USA TODAY Network via Reuters Connect