Almost of half retirees and pre-retirees in the U.S. underestimate average life expectancy, according to a new report.
The Society of Actuaries, Schaumburg, Ill., published this finding in a summary of results from its “2012 Risks and Process of Retirement Survey.” This sixth biennial study, conducted on the SOA’s behalf by Mathew Greenwald Associates and the Employment Benefit Research Institute, asked respondents about their views respecting longevity risk.
Approximately four in 10 respondents (43% of retirees and 38% of pre-retirees) underestimate average life expectancy by five year or more, the report reveals. Another two in 10 underestimate it by two to four years.
Four in 10 retirees (42%) and pre-retirees (41%) correctly respond that about half of 65-year-old men and women can expect to live until median life expectancy (age 83 for men and age 86 for women). Two in 10 (21% of retirees and 20% of pre-retirees), believe that fewer than half will live at least until that age, while approximately one-third (31%) and 36%, respectively) believe about 75% or more will live until then.
Typical retirees and pre-retirees see themselves living until age 84 (median for retirees) or 85 (median for pre-retirees). The report notes, however, that one-quarter of retirees (24%) and almost three in 10 pre-retirees (28%, up from 15% in 2005) think they will live until age 90 or later.
At the other extreme, one in 10 retirees (9%) and pre-retirees (10%, down from 16% in 2005) do not think they will reach age 75.
A comparison of respondents’ estimates of personal life expectancy with population life expectancy demonstrates that more than half of retirees think they will not live as long as the average person of their age and sex (54%). Only three in 10 retirees (31%) cite a life expectancy that is longer than the population average.
In contract, pre-retirees are almost as likely to think they will live below the population average (46%) as they are to think they will live beyond it (41%), the study funds.
When asked the reason for their estimate of their own life expectancy, roughly half of respondents (47% of retirees and 51% of pre-retirees) cite family history. One-third mention health habits, such as staying active, exercise, eating right and not smoking.
About the same proportion gives their personal health as the reason, the study states. Fewer mention a positive attitude, average life expectancy, guessing and good health care.