There will be four times more Americans 100 and older in 2054 than there are today, the U.S. Census Bureau projects.
But only 29% of people living today want to reach the century mark. Why the lack of enthusiasm? Financial and health concerns: About 3 in 4 fear they’ll run out of money before they run out of time
Research by Nationwide Retirement Institute and The American College of Financial Services lays out the troubling disconnect: Financial planning hasn’t kept pace as lifespans have risen into the 90s and beyond. There’s an increasing risk that millions could outlive their savings, according to the research — conducted as part of the Nationwide Retirement Institute’s Century Club campaign, which explores the financial implications and consumer sentiment related to rising life expectancy.
Extending a retirement from 30 to 35 years increases the risk of depleting savings by 41%, based on historical market returns, according to the study. The risk grows as lifespans lengthen, especially among healthy, higher-income retirees, the report’s authors wrote.
A related consumer survey by the Nationwide Retirement Institute found that most Americans underestimate both their chances of living to 100 and the financial strains such longevity brings. Only 29% said they want to live that long, expressing concerns about declining health and financial difficulties. About 75% are afraid they’ll run out of money before they die.
The joint research found that current economic conditions are feeding that anxiety. Among non-retired Americans, 40% plan to delay retirement because of inflation. Lower projected 10-year portfolio returns are also cause for concern, the authors say. Extending retirement by five years increases the risk of running out of money by more than 300%, according to the analysis by The American College of Financial Services.
“These findings send a clear message — retirement planning needs a major reset,” the authors wrote. Both consumers and advisors must shift their mindset, prioritizing longevity risk and placing a stronger emphasis on guaranteed income strategies that can weather uncertainty, they said.
“Too many people underestimate how long they’ll live — and that blind spot can seriously undermine their financial security,” said Michael Finke, professor of wealth management, director of the Granum Center for Financial Security at The American College of Financial Services and co-author of the study, in a news release. “We consistently see that those who plan for longevity feel more confident about retirement. The key drivers of that confidence? Working with an advisor, having access to guaranteed income, and building a plan that’s designed to last.”
The first step in preparing financially for long life is considering how long you might live, the authors wrote. But fewer than half of Americans (48%) consider lifespan when making decisions on savings and investments, according to the Nationwide Retirement Institute’s survey. About a quarter of respondents (26%) were able to estimate the longevity of a 65-year-old man.
However, researchers found that if Americans knew they would live longer, many would take action to improve their well-being, both physical and financial.
67% would pay more attention to their finances and increase their savings
37% would delay retirement
63% would take on less debt
Optimists are 75% more likely to save at least 10% of their income, The College’s research found, which the authors said demonstrates how a positive perspective can drive more financially secure retirements. Financial literacy is “a quiet driver of retirement readiness,” they wrote.
“When people think seriously about living longer, it becomes clear that physical, mental, and financial health go hand in hand,” said Kristi Martin Rodriguez, leader of financial services marketing and the Nationwide Retirement Institute. “Just as we encourage healthy habits to support longer lives, we need to help build strong financial habits that ensure people can thrive well into their later years.”
The researchers reported that 70% of Americans believe society is ill prepared to meet the needs of people with longer lifespans. But the authors said effective solutions do exist, including long-term care insurance and guaranteed income products, such as annuities and protected retirement solutions available in many employer-sponsored retirement plans. These tools remain widely misunderstood or overlooked, the authors added.
Nearly one-third of respondents in the Nationwide survey (32%) say long-term care insurance would be one of the most helpful resources for preparing to live to 100. But only 1 in 10 own a policy. And 31% say an investment that guarantees income for life would help them feel more financially secure, but knowledge and adoption of annuities remain low.
“As the risk of longevity combined with today’s volatile market environment create what might seem like a perfect storm for retirement savers, the good news is that solutions exist to provide a measure of certainty in an uncertain environment,” Rodriguez said. “Financial professionals and others serving America’s retirement savers can play a critical role in bridging this gap, tailoring strategies to individual needs – especially for groups like women, who tend to live longer, score slightly higher in longevity literacy, yet report lower retirement confidence overall.”
