Early retirement could cost you thousands of dollars
A new study by economists from Boston University and the Federal Reserve Bank of Atlanta indicates that only 6% of American workers wait until the maximum age of 70 to claim all possible Social Security benefits.
A new study has found that most Americans don’t know how long they expect to live, alarming researchers who say a lack of ‘longevity knowledge’ could mean many who believe they are prepared for retirement may run out of funds in their golden years.
The 2022 Personal Finance Index from the TIAA Institute and the Global Financial Literacy Excellence Center at George Washington University asked for the first time in the survey’s history whether respondents knew the life expectancy of Americans who have currently 60 years old, in the form of a multiple-choice question. The correct answer is 82 for men and 85 for women.
Only 37% answered correctly. More than half – 53% – said they didn’t know the answer or underestimated how long they were expected to live by six years.
These findings highlight a problem with retirement planning, the researchers say, who note that a person cannot accurately plan how much to save if they don’t even know how long their savings will be. probably last.
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“Overestimating people and successful people behave quite similarly in terms of saving for retirement,” said Annamaria Lusardi, academic director of GFLEC. FOX Businessnoting that the data shows that “knowledge of longevity” increases the likelihood that respondents are on the right track with their retirement savings.
FILE – A woman sits in a wheelchair at a nursing and retirement home. (Photo by Sebastian Gollnow/picture alliance via Getty Images)
Those who accurately answered the question about life expectancy were more likely to save for retirement while working, and were also significantly more likely – 40% versus 25% – to answer that they were confident of have enough money to live comfortably in retirement.
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Another notable finding of the study was that there was a gender gap in both knowledge of life expectancy and in financial literacy.
Women were more likely to be accurate about longevity (43%) than men (32%), but men’s financial literacy was stronger.
Surya Kollari, head of the TIAA Institute, says the discovery could change the way the industry approaches retirement planning conversations and indicates the importance for financial advisors to meet with both spouses in a household to address longevity considerations as part of their discussions – along with caregiving needs, long-term care and health care costs.
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“We know that women live longer and our research has shown that they lag behind men in financial literacy,” he explains. “An industry focus on providing advice and guidance would be timely and valuable.”
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