Will You Outlive Your Money?

To prepare for a long life span, retirees must address the need for long-term care.

- LIVING IN RETIREMENT BY JANET BODNAR

PONDER this question: On average in the U.S., how long will a typical 65-year-old live? When the TIAA Institute and Global Financial Literacy Excellence Center asked that question as part of their most recent Personal Finance Index survey, 35% of respondents underestimated the answer and another 24% admitted they did not know. Only 32% knew the correct answer: age 84 for men and age 87 for women.

Similarly, only about one-third knew the likelihood that a 65-year-old would live until age 90: 30% for men and 40% for women.

It's a classic case of good news/bad news. The good news: People can expect to live longer than they think. The bad news: Because of this gap in “longevity literacy,” they may not be financially prepared for a long life span. For people still in the workforce, that can mean not saving enough or retiring too soon. For retirees, that can mean not addressing the need for long-term care.