Liz Weston of NerdWallet points out in an essay in The Associated Press financial advice that women often don’t score as well as men in financial literacy surveys. One area she thinks they might be better at is “longevity literacy,” or understanding how long you can live. Longevity literacy is essential for smart retirement planning. Overestimating life expectancy can lead to retirement too late or saving too much. Underestimating can run you out of money. A recent study by the TIAA Institute found that 43% of women in the United States accurately estimated life expectancy for women aged 60. (She was 85 years old.) Only 32% of men chose the correct answer for the life expectancy of a 60-year-old man, while he was 82 years old. Also, men are much more likely than women to underestimate their life expectancy, which is a huge deal. A potential problem for both men and women.
A man who expects to die in his 70s may be drawing too much out of his retirement account or starting Social Security too early. Then he, and the spouse who may outlive him, may later earn too little. “Most people do well in the first 10 or 15 years of retirement,” says Steve Vernon, an actuary and former researcher at the Stanford Center for Longevity. “It’s often in their late 70s and 80s that they start to suffer.” Longevity is characterized by persistence. The longer you live, the more likely you are to live longer. He has a 50% chance that at least one of a 65-year-old heterosexual couple will live to her 92. Longevity is accompanied by “longevity risk”. That is, the likelihood that people will live longer than their savings.
The single most powerful way to reduce longevity risk is to delay claiming Social Security benefits. He can start as early as age 62, but applying before the full retirement age (currently 66 to him 67) will permanently reduce the check. Delaying your application past full retirement age can add 8% for each wait until age 70, when benefits are at their maximum. The postponement is particularly important for high-income couples, as the amount that survivors receive depends on the benefits of high-income earners. After the death of the first spouse. Virtually all U.S. workers between the ages of 45 and 62 should delay applying after age 65, and more than 90% should wait until age 70, according to a 2022 paper from the National Economic Research Service. But right now, only about 10% of applicants are waiting. long, the researchers found (read the full story).
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