Will You Outlive Your Savings? Here’s How to Boost Your Longevity Literacy

As Americans juggle the rising cost of living, the decline of pensions, longer lifespans, and other complex factors, median retirement savings stand at only $82,000—far below the $1.5 million that Americans believe is enough to retire comfortably.

Taking the time to improve your longevity literacy can be worth the effort—it could help you get your retirement on track. Here’s what you need to know.

Key Takeaways

• Longevity literacy is knowing the length of your lifespan and how it will impact your retirement planning.
• To make sure you don’t outlive your savings, be realistic about how long you’ll need to be in the workforce. You may need to work longer than you previously thought.
• You can also improve your skills, which may bring in more income or more types of income.
• Invest based on the stage of life that you’re in. In general, when you’re young, stocks should comprise most of your portfolio. As you age, some stocks should be replaced by bonds.

What Is Longevity Literacy?

Longevity literacy is knowing how long you’re likely to live, particularly in relation to retirement planning. It includes knowing not just life expectancy averages but also the likelihood of living past certain ages and the financial implications of an increased lifespan for your quality of life in retirement.

Some experts believe that those with low longevity literacy tend to be less financially secure than they might think. In fact, a 2023 TIAA Institute survey found that most American adults have poor longevity literacy—meaning they couldn’t tell you the life expectancy of a 60-year-old in the U.S.

The TIAA Institute says its mortality tables factor in a tendency toward longer life expectancy due to factors such as education level, type of work a person did, the amount they made, and their access to medical care. According to their data, they assume a 67-year-old will live, on average, another 23 years, with a 25% chance of living 28 years and a 10% chance of making it all the way to age 100. That means saving more for retirement than many people do.

Tips for Building Savings That Outlive You

To answer the question of how long you’re going to live, you can use a life expectancy calculator, like the one provided by the Social Security administration. Simply enter your sex and date of birth, and you’ll learn how many years, on average, you have left, and the age you’ll be when you die. This information, while a bit morbid, is crucial for retirement planning. But be aware it may underestimate your number based on all the same factors that TIAA takes into account.

Knowing your number will help you build financial resilience and cultivate a stronger quality of life. 

“The years you spend planning for and living in retirement are two fundamentally different seasons of your life—and can be equally long,” says Michael Kuplic, CRPC, a financial advisor at Ameriprise.

The following tips can help you build a healthy nest egg and be better prepared for the number of years you’ll be in retirement.

1. Increase Your Retirement Savings

While it’s easier said than done, contributing more to your savings account will help bridge the gap between your targeted amount and the actual outcome. To do so, it’s important to set up a plan based on how you would like to live in retirement. 

“While having enough money for retirement is important, it is also imperative to ask yourself, What am I retiring to?”, Kuplic says. “Knowing what you truly want and need out of retirement is the first step in designing a specific plan to turn those wishes into action.”

Auto-enrollment plans are another avenue for building your retirement savings. You can structure these so that contribution amounts auto-escalate over time. As a general rule of thumb, try to contribute at least 15% of your paycheck. At minimum, contribute enough to qualify for your employer’s matching contribution.

2. Consider Working Longer

Working for longer is a great way to build financial stability in retirement. You might expand your skillset, move into a consultant-type role, or take on part-time opportunities.

Note

Working in your ’60s isn’t uncommon.

According to a study from the Pew Research Center, about one in five (nearly 20%) of American workers are 65 or older. That’s nearly double what it was three decades ago. And those age 65 and older report greater job satisfaction compared to younger generations.

3. Invest Based on Your Life Stage

Making the most out of your retirement savings involves adjusting your investment strategy based on your life stage. 

“These two phases have fundamentally different goals, risks, and complexities, often needing separate investing and financial planning strategies,” Kuplic says.

Equities historically offer higher returns than bonds. You can afford to place more of your diversified portfolio in stocks when you’re younger. As you age, you’ll need to shift the mix toward bonds. For example, short-term bonds can provide an income stream in retirement. 

It may be a good idea to consult a financial professional to guide you.

The Bottom Line

As lifespans grow longer, the average expected retirement age among people who haven’t retired yet is rising. In 2022, it was 66 years old (compared to 60 years old in 1995), according to a Gallup poll. By contributing more to your retirement account(s), working longer, and investing based on your life stage, you can improve your chances of success during your retirement years.