By: Emily Allison, Graduate Assistant, SDSU Social Policy Institute
Over 16.5 million older adults 65 and older are financially insecure—either living at or below 200% of the federal poverty level (FPL) ($25,760 for a single person in 2021). With rising health care and housing costs, millions of older adults are continuously placed at a greater risk for physical and mental health challenges.
Many Americans struggle to estimate how long their retirement stage will last, or for better words, how long they will live. A significant number of adults understand the average American lives between 75 and 80, but many do not realize how as time progresses, life expectancy rates will only continue to rise. Experts have been able to determine that with each generation, life expectancy rates can expect to increase by 3 years.
Six years of research conducted from the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) have revealed how longevity literacy can determine an individual’s preparedness for retirement. This information has been monumental for understanding and predicting economic stability in retirement, bringing light to an important societal issue among a growing aging population.
Now, what exactly is longevity literacy, and what is its relevance to economic stability in retirement? It is the predictive component of one’s own life expectancy. Overall, studies from the TIAA have generally found longevity literacy to be low and predominantly underestimated among both men and women across different age groups.
Only 37% of adults have what is called strong longevity knowledge, with nearly 50% of individuals saving for retirement without previously calculating how much they need to save over time to maintain financial security. Creating a retirement plan for 10 years can be significantly different from a 20-year retirement plan.
A recent analysis by the National Council on Aging discovered how 80% of people over the age of 60 lack the financial resources to cover long-term care. It is understood that more than half of Americans will eventually need long-term care and supportive services, costing an average of $120,900, according to federal research studies. Without this understanding, adults will continue to be at a greater risk for outliving retirement savings.
Now, with education and awareness comes empowerment. The TIAA concluded in their main findings that U.S older adults with greater financial literacy have better financial well-being over time. However, it is critical to note that financial literacy is tightly connected to longevity literacy. This indicates that if longevity literacy continues to be underestimated, adults will not be properly equipped to plan for time to be spent in retirement
These findings provide great opportunities to educate on the subject matter with an objective to help improve retirement readiness and financial security among older U.S adults. Through initiatives focused on improving financial literacy and longevity literacy, adults can experience more confidence as retirement security is strengthened.
Samuel LJ, Wright R, Granbom M, Taylor JL, Hupp C, Roberts Lavigne LC, Szanton SL. Community-dwelling older adults who are low-income and disabled weathering financial challenges. Geriatr Nurs. 2021 Jul-Aug;42(4):901-907. doi: 10.1016/j.gerinurse.2021.04.025. Epub 2021 Jun 4. PMID: 34098443; PMCID: PMC8316314.
U.S. Census Bureau. POV-01. Age and Sex of All People, Family Members, and Unrelated Individuals, 2021. Found on the internet at https://www.census.gov/data/tables/time-series/demo/income-poverty/cps-pov/pov-01.html