Longevity Literacy is becoming a hot topic.
It refers to understanding how long you can expect to live “in retirement,” and whether or not you will have enough money to support you — with a good quality of life — throughout those years.
SuperAgers look forward to 20 or 30 years (or maybe more) past the traditional retirement age of 65. The challenge of funding those years, and not “outliving your money,” is a red-hot issue. In response, SuperAgers are increasingly likely to not retire at age 65, but to keep on working and earning. Some see this as the most rational response to dollars and cents needs; others, because work means engagement and accomplishment and, in itself, can promote longevity.
There’s no question this attitude is growing. But apparently an alarmingly high number of people are still stuck in the past model, measuring everything in terms of their readiness (or not) at age 65, to permanently leave the labor force.
As reported here, “a staggering number of Americans display low longevity literacy, which hinders retirement planning and saving.”
The research was conducted by TIAA Institute (Teachers’ Insurance and Annuity Association) and the Global Financial Literacy Excellence Center at George Washington University School of Business.
“Our research clearly demonstrates a lack of longevity literacy among the vast majority of U. S. adults,” says Surya Kolluri, head of the TIAA Institute. Less than 40% of adults correctly identified the average lifespan at retirement age. It’s different than life expectancy a birth.
In 2020, the average American life expectancy at birth was 77, but if you were already 65, your life expectancy was 83 (male) and 86 (female). More than two million Americans are over the age of 90. If you don’t know these numbers, it isn’t surprising that your planning will fall short — maybe catastrophically short.
There’s no question that the DefaultAging model — retire at 65 and have enough money for about 10-12 years — is fragmenting into many alternatives. All of them involve the likely requirement of more money over a longer period of time.
You’ll get an excellent picture of the situation, and on a worldwide level, in this report from the World Economic Forum, in collaboration with Mercer. It’s packed with data and valuable insights. Two, in particular, jumped out at us:
First, there’s a massive difference in labor force participation rates among “older” workers in Europe, compared to the USA and Asia.
The labor force participation rate among those aged 65+ is less than 5% in Italy, France, Spain and Belgium, and only 9.7% in the UK. In the USA, by contrast, it’s 19%; in China, 21%; in India, 23%; in Japan, 25% and in Korea, 37.5%. Clearly, the older people in those countries are responding much more aggressively to the need to generate more cash for longer.
Second, SuperAging is already taking hold everywhere. When asked, “What age would you like to stop working?” almost half went beyond the traditional age of 65.
21% said they’d stop between age 66 and 70.
9% said, between 71 and 75.
1% said, 76 and older.
And 10% said they wanted to work “as long as I can.”
The issue of financial independence — and its relationship to being in the workforce vs. having accumulated savings and ongoing investment income — will remain a central topic of the whole SuperAging phenomenon. You can expect to keep reading much more about it here!