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Underestimating Longevity Could Undermine Your Retirement Nest Egg

Maybe you’ve done all the right things—saving, investing, and managing debt—to build a solid nest egg to live out your retirement comfortably and cover critical issues like housing, medical costs, long-term care, vacations, and hobbies. But have you considered how long you’ll live? Will your plans and finances be sufficient to take you to 90 or 100 years old? 

The TIAA Institute and the Global Financial Literacy Excellence Center at the George Washington University School of Business found that most people need greater longevity literacy. After all, underestimating your longevity affects retirement readiness and could erode your nest egg, particularly if there are spikes in housing, food, healthcare, and energy prices. 

Its recent study “An unrecognized barrier to retirement income security: Poor longevity literacy” notes that retirement savers with strong longevity literacy have greater confidence that they’re saving enough for retirement than those with weaker longevity literacy. They’re also more likely to have figured out how much they need to save for retirement.

Yet only 12% of U.S. adults have strong longevity literacy, says the report. That lack of understanding is problematic, given that retirement savings and planning must be based on an accurate understanding of how long retirement could last.

“The fact that 30% of 65-year-old men and 40% of 65-year-old women in the U.S. live to at least age 90 should have a significant influence on retirement planning and saving, as well as decumulation decisions,” researchers wrote.


Measure your life expectancy

To improve your longevity literacy, try an online calculator and get a handle on how long you may live. The calculators predict your life expectancy based on things like age, family history, diet, exercise, and drinking and smoking habits. 

Here are four options. 

Plus, there are ways to improve your financial picture if you’re over age 50. Here are four. (Click HERE to continue)


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