By underestimating life expectancy, employees risk running out of money in retirement, according to a new survey by analytics firm Club Vita.
The survey, which polled 3,000 respondents in Canada, the U.K. and the U.S., found on average, people underestimated their life expectancy by 4.7 years. Women underestimated their longevity by an average of 6.1 years, while men underestimated by 2.5 years. The survey also noted there’s only a four per cent chance of dying at age 65.
On average, respondents said they’re planning to retire between ages 60 to 64. More than half (56 per cent) said they haven’t saved enough for a comfortable retirement, compared to 23 per cent who believe their retirement savings might be or will be sufficient. And respondents who said they feel financially unprepared for retirement are expecting to retire at 63, while those who feel more prepared said they’re planning to retire at 60.
“Longevity pessimism could significantly impact later-life financial well-being,” said the survey. “If people underestimate how long they will live, they expose themselves to the risks of undersaving, overspending and running out of money in retirement. It also means they will undervalue guaranteed lifetime payment offerings such as annuity contracts or workplace defined benefit pensions.”