Most of us seem to know that the average American lives between 70 and 80 years: 73.5 years for men, 79.3 for women, to be exact.

Fewer of us understand that life expectancy rises with age. An American man who turns 70 today will live to 85, on average. A woman of 70 will live to 87. 

That knowledge is called longevity literacy. Many of us don’t have it, and ignorance may cost us.

Let's say a man retires at 65 with $250,000 in savings. If he spends it down at a rate of $30,000 a year, the money might last him to age 73.5. But longevity tables say he can expect to live another decade, to 84.

A large share of older Americans, and especially men, don’t know how long their own retirement is going to last: in other words, how long they are going to live.

Longevity literacy matters when it comes to retirement planning. If your retirement budget assumes you will live to 75, and you make it to 85, you will probably run out of money.

“Moving into retirement, you have to think about, ‘When am I going to die?’” said Paul Yakoboski, a senior economist at the TIAA Institute, the research arm of the financial-services nonprofit. “That filters back on how I’m managing my money, how I’m drawing it down.”

The TIAA Institute publishes widely read surveys on retirement finance. When the institute asked Americans, in a recent survey, how long a man of 65 is likely to live, only one-third of the men gave the correct answer: 19 more years.

A larger share of men in the TIAA survey, 35%, underestimated the lifespan of a retirement-age male. Another 23% said they didn’t know. That response, in particular, left researchers bewildered: the question was multiple-choice.

Women seem to understand longevity somewhat better. In the survey, 36% correctly answered that a woman of 65 can expect to live about 22 more years, to age 87. Only 26% guessed low.

“Women just have a better grasp on that,” Yakoboski said. “The reality of most households, it’s the woman who focuses on the healthcare in the family and everybody’s wellbeing and caregiving issues.”

Their findings draw on a nationally representative survey of 3,503 adults.

How long does retirement last? Longer than many people think

Luigi Ferrucci is 69. According to official CDC data for human longevity, men live to about 74, which would give Ferrucci another five years.

But Ferrucci works at the National Institute on Aging, and he knows about longevity. If an American male reaches age 69, he can expect to live to 85, according to a simple longevity calculator from the Social Security Administration.

Ferrucci expects to live longer than that.

“My mother died at the age of 97, and my father died at the age of 98,” both in Italy, said Ferrucci, scientific director at the federal agency. He credits good genes and the Mediterranean diet.

The human lifespans reported by the Centers for Disease Control and Prevention are “calculated at birth,” Ferrucci said. Those are the numbers most Americans learn in school, the ones reported in the newspaper every year.

But life expectancy goes up from there. Simply put: The longer you do live, the longer you will live.

“Mortality is very high in the first year of life, and then declines, and then tends to increase gradually,” Ferrucci said.

TIAA has made longevity literacy something of an institutional crusade, putting out reports that warn of dire consequences for older Americans who do not plan for the full span of their retirement.

“You look at the numbers, there’s a good chance someone at 67 is going to be alive at 90,” Yakoboski said, speaking in a video conference call interview. “Some of those people are going to be alive at 100.”

His colleague, Andrea Sticha, chimed in: “The decision you have to make is whether to outlive your money or leave something behind.” Sticha is deputy academic director of the Global Financial Literacy Excellence Center at Stanford University.

In retirement savings, plan for a longer life

The takeaway here is twofold, the researchers said: Figure out how long you are going to live, and make sure you have a retirement plan that covers those years.

The TIAA researchers have noticed that people with strong longevity literacy, about 12% of the population, are more likely than other adults to have a retirement plan. Conversely, people with a solid retirement plan tend to understand how long they will live. The two traits go hand in hand.

“Individuals with better longevity literacy do a better job planning and saving for retirement,” Sticha said. “There’s a very strong link between longevity literacy and retirement outcomes.”

Here are a few simple tips for retirement planning:

• Make a plan. Consult a retirement calculator. Meet with a retirement planner, or do the math yourself. Experts say you'll need 70% to 90% of your working income to maintain your standard of living. Figure out how long you are likely to live. Assess your health risks.
• Start saving, if you haven't. Try to increase the amount you save every year. Resist the temptation to spend the money. Take full advantage of your 401 (k) plan, if you have one.
• Build net worth: Pay down debts. Trim unnecessary expenses. Consider working longer, especially if the work is fulfilling. Consider drawing Social Security later, yielding a larger monthly check.

Sticha and Yakoboski collaborated with researcher Annamaria Lusardi on an August TIAA report on longevity literacy.

The scholars are alarmed that so many adults underestimate how long they will live. If anything, people should err in the opposite direction. If you are 65 now and expect to reach 85, plan for 90.

How much money do you need to retire?Most Americans calculate $1.8 million, survey says.

Roughly half of Americans have at least attempted to calculate how much money they will need to live comfortably in retirement, according to the Employee Benefit Research Institute's 2023 Retirement Confidence Survey.

And how much should you save for retirement? One analysis, from the investment firm T. Rowe Price, suggests a savings target of seven to 13 times your annual salary by age 65.

The EBRI survey found that only 64% of workers believe they will have the funds to last through retirement. The figure declined sharply over the past year. Americans are worried about nagging inflation and sagging retirement savings, which took a hit in 2022. The average 401(k) account lost about one-fifth of its value last year, according to Fidelity Investments data.

Here's why budgeting for retirement matters more than ever

Budgeting for retirement is more important than ever, said Craig Copeland, director of wealth benefits research at EBRI, because more Americans are setting the budget themselves.

In decades past, many American retirees relied primarily on Social Security and defined-benefit pensions, funding sources that guaranteed steady payments until death.

Over time, the traditional pension has given way to the 401 (k) and other defined-contribution plans. Upon retirement, the worker sets the schedule for withdrawing the money.

“Longevity,” Copeland said, “is the key factor in that equation.”