Retirement & Financial Planning Report

An individual’s own idea of how long he or she will live—what is called “subjective” life expectancy—often influences retirement decisionsmore so than the figures calculated by the government, insurance industry and others that have a more sound basis in statistics, a study has said.

The Center for Retirement Research’s study provides a factor to consider that many may be overlooking as they plan for retirement.

It said that other studies have found that expectations of a relatively short life expectancy in particular affect behaviors such as retiring earlier and claiming Social Security benefits as early as possible.

A survey of those between ages 50 and 61 found that on average they estimated they had a 68 percent chance of living to age 75 and a 47 percent chance of living to 85. Those estimates track closely with actual statistics, which show a 70 and 42 percent chance, respectively.

However, within that average there was wide variation, “perhaps due to health concerns or family history.” The third of respondents with the lowest estimates thought they had only a 37 percent chance, on average, of living to age 75 and only a 21-percent chance of living to age 85.

It concluded: “Workers who think they have excellent chances of living to ages 75 and 85 expect to work longer and retire later than workers who think their chances are poor. Subjective life expectancy also affects actual retirement behavior, though to a lesser degree than retirement expectations. These results are consistent with the notion that while workers who expect to live longer plan to retire later, actual retirement plans are influenced by unexpected shocks.”