Americans dream of living a long life, but many realize they can’t afford to, according to a new survey.
Average Americans say they want to live to age 88 but can only afford to live to 83, a survey of 1,000 adults in September by life insurance platform Ethos found. About 1 in 6 (17%) who had retirement savings didn’t even think their money would last to age 80. When including those who had no retirement savings, 47% said they’d have no retirement money left before their eightieth birthday. Half of all respondents said they’d be scared to live to 100 because they wouldn’t have the money to survive.
Instead of fearing a long life, Americans should plan for one, financial advisers say. The right plan can set up regular, predictable income for as long as people live, which could allow them to relax and enjoy a long retirement, they say.
“Living longer should be something we look forward to, not something we fear,” said Jason Juhl, partner and retirement expert at Carson Wealth advisory firm. “We want to protect our future selves, absolutely, but not at the expense of enjoying the healthy years we have today. A successful retirement isn’t about dying with the largest portfolio. It’s about having the confidence to live the life you’ve worked so hard to build.”
Do Longevity and Money Fears Change With Age?
The good news is fears ease with age, the study showed.
Boomers wanted to reach 89 years old and believed they could afford up to age 87, a gap of just 2 years, Ethos said.
Younger generations showed a much wider gap between how long they wanted to live and how much time they believed they could afford. Millennials wanted to live 88 years but expect their money to last until age 81, a 7-year gap, the survey showed. Gen Z reported the same 7-year gap, but wanting to live to age 89 while only expecting to be able to afford living until age 82. Gen X was close behind with a 6-year gap, wanting to live 89 years but predicting only to be able to pay for 83, Ethos said.
“Being retired or closer to retirement, baby boomers may have a clearer view of their savings and expenses, while younger adults are still filling in the picture,” Ethos said in the report.
One Thing Americans Fear Most That’ll Bust the Budget
Nursing home care (37%) is the aging-related cost Americans worry about and underestimate the most, Ethos said. Out-of-pocket health care came in second (25%) as the cost that worries them most, followed by housing (18%).
Nursing home expenses as the top concern “makes sense,” Ethos said. “Long-term care can last for years, and it often occurs at the same time people are living on a fixed income.”
Yet, Americans continue to underestimate nursing home costs by half. Americans estimated that a year in a nursing home costs $60,829, Ethos found. However, the FLTCIP 2024 Cost of Care Survey, administered by the U.S. Office of Personnel Management, showed the national average was $112,420 annually for a semi-private room.
Learning that was a buzzkill for Americans of every generation surveyed by Ethos. Gen Z took the biggest hit, with the number who believe they’d have enough money to live 80 years falling to 51% from 61%, it said. Millennials dropped to 51% from 56%, and baby boomers slipped to 62% from 67%. Gen X saw the smallest change, easing to 55% from 58%.
How Can Americans Erase Their Fears?
“Plan for income that lasts as long as you do,” said Troy Thompson, chief insurance officer at Ethos. “Two-thirds of Americans would take a smaller guaranteed paycheck for life over a bigger balance that could run dry, yet 40% of 401(k) holders expect their account to pay a monthly check for life. A traditional 401(k) doesn’t do that on its own.”
Some actions Americans can take to support a long life, financial advisers said, include:
- Buy life insurance. Whole life insurance can serve as a financial cushion if you need a little extra money for health care needs, Steve Azoury, owner of Azoury Financial, said. People can withdraw what they paid in premiums from the policy tax-free or take a loan from it that reduces the death benefit for heirs if not repaid.
- Plan assuming you’ll live to age 90 or 95, and carefully time when to take Social Security, said Pam Kreuger, founder and chief executive of Wealthramp, a network of fee-only advisers. If you wait until the full retirement age of 67 to claim Social Security, you will get 100% of the benefit. Each year you wait after FRA will get you 8% more up to age 70. “If the money works at 95, 88 stops feeling like a cliff,” said Jay Pinkston, founder of Pinkston Wealth, LLC, a fee-only fiduciary firm.
- Rethink the traditional retirement model with phased retirement and flexible careers, said Jordan Weiss, assistant professor at New York University’s Grossman School of Medicine, Optimal Aging Institute. An additional $1,000 of monthly income is like adding about $300,000 to savings at a 4% withdrawal rate, Kreuger said.
- Long-term health insurance isn’t cheap but could be an option when you’re still healthy and in your 50s to early 60s to help pay for health care in old age, some financial advisers said.
- Consider an annuity from A-rated carriers, said Stan Haithcock, owner of fixed-annuity brokerage The Annuity Man. “When baseline living costs are contractually guaranteed for life, living to 88 or beyond stops being a financial threat and becomes something retirees can look forward to,” he said.
- Treat home equity as a reserve for your 90s, Pinkston said. “A paid-off home can help cover late-life care, and knowing it’s there makes it easier to spend confidently earlier. It isn’t liquid and it isn’t free to tap, so it works best as a backstop, not a spending plan,” he said.
- Spend some of your kids’ inheritance, Kreuger said. “Why not use some of that money for your own care, security and quality of life, so you never have to go to your kids for help later? That may be the best gift you can give them,” she said.
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
Reporting by Medora Lee, USA TODAY / USA TODAY
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