Older people are often concerned about how economic factors like inflation and living costs will impact retirement. However, if someone doesn’t understand how long retirement can last, they could run out of resources too quickly, according to a new report by the Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA).
“Longevity literacy, like financial literacy, tends to be low among U.S. adults,” the report states. “Most lack a basic understanding of how long people tend to live in retirement. Retirees with strong longevity literacy more typically planned and saved for retirement while still working and now tend to experience better financial outcomes in retirement.”
While financial literacy is still important in retirement planning, longevity literacy could have an impact on retirement choices, including the types of investments and how long resources can last. However, the report found that higher levels of financial literacy corresponded to higher longevity literacy as well.
Gender and generation divides also impact longevity literacy, according to the report.
“Women tend to have greater longevity literacy than men,” the report states. “43% of women demonstrated strong longevity knowledge compared with 32% of men.”
Of the survey respondents, members of the “Silent Generation” (born between 1928 and 1945) had the highest levels of longevity literacy at 46%. Baby Boomers followed (45%), while younger generations scored lower across the board. Generation X came in at 37%, followed by Generation Y (Millennials) at 32%, and Gen Z at 30%.
Financial longevity is a common topic discussed with reverse mortgage clients. During outreach, some reverse mortgage professionals will explain how a reverse mortgage could help provide qualifying borrowers with more cash flow if savings or investments are under pressure.
“In retirement, people typically have a set amount of dollars they can spend per month and rarely do cost of living adjustments on pensions or SSI keep up with the true cost increase of goods and services,” said Ennkar’s Omar Ennabe in an interview last year. “When I discuss inflation with our clients, I advise them to always prepare for the certainty of uncertainty and to be ready for the worst-case scenario. For this reason, I counsel them to give themselves more options and greater flexibility when thinking about a mortgage product that fits their needs/wants.”