Retirement planning faces longevity risk as Americans live longer

"A 65-year-old man today can expect to live to 84 years old, while a 65-year-old woman can expect to live until 86. For plan sponsors and advisers, that translates into a potential distribution horizon of at least 20 to 30 years. Without incorporating realistic longevity assumptions into glide path design, withdrawal strategies and income solutions, participants face a heightened risk of outliving their savings."

"TIAA concluded that longevity literacy tends to be poor among U.S. adults, as an accompanying survey found that only 32% of respondents correctly answered a multiple-choice question about the life expectancy of a 65-year-old. Another 35% underestimated this timeline and 24% said they didn't know."

"Workers who expect relatively short lifespans due to misperceptions about population life expectancy are at risk of accumulating inadequate financial resources for retirement—their retirement planning horizon is too short. The influence of perception is problematic since poor longevity literacy is synonymous with misperceptions."

"50% of those who expect to live less than 10 years after retirement are saving on a regular basis. Conversely, 70% of those who expect a retirement of 20 years or more save regularly, the survey found."

Federal data shows 65-year-old men can expect to live to 84 and women to 86, creating potential distribution horizons of 20-30 years for retirement planning. A 2025 TIAA Institute study reveals significant longevity literacy gaps: only 32% of U.S. adults correctly answered questions about 65-year-old life expectancy, while 35% underestimated and 24% didn't know. These misperceptions directly impact retirement savings behavior—50% of those expecting less than 10 years of retirement save regularly, compared to 70% expecting 20+ years. Workers with inaccurate longevity perceptions risk accumulating insufficient financial resources. Plan sponsors and advisers must incorporate realistic longevity assumptions into glide paths, withdrawal strategies, and income solutions to prevent participants from outliving their savings.

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