Longevity Risk and Reward for Middle-Income Americans

Living longer has its rewards. Middle-income retirees say they are having experiences in retirement that they never imagined, such as travel and volunteering. However, longevity also comes with risk, the two primary concerns being declining health that is associated with age, and the ability to create a sustainable retirement income that may need to last 20 years or more.

With the release of its latest report, Bankers Life and Casualty Company Center for a Secure Retirement looks at longevity’s impact on the retirement experience of middle-income Americans and their view on the role Social Security plays as the cornerstone of retirement income.

Key Findings

More than eight in ten (87%) middle-income Americans age 55 and older do not spend much time thinking about longevity.

Longevity is not a topic of discussion for most middle-income Americans, with only half talking about it with a doctor (50%) or spouse (49%) and only one-fifth (21%) discussing life expectancy with a professional advisor.

Middle-income Americans think they will live to age 86, irrespective of gender, income or health.

Wisdom comes with turning age 56, but “old age” does not really start until age 78, according to middle-income retirees and pre-retirees.

Two-thirds of middle-income Americans feel that their life expectancy is out of their control, saying that genetics (65%) is the determining factor in how long they will live as compared to their own actions, such as eating right (46%), exercising (44%) or smoking (37%).

Declining health is the number one longevity concern for middle-income Americans, nearly four times the concern over inadequate retirement savings or outliving their money.

To compensate for the possibility of outliving their income, nearly two-thirds (63%) of middle-income Americans plan to reduce their own spending in order to deal with shortfalls in retirement income and resources. Two-fifths (41%) would get a part-time job and one-quarter (25%) would sell their home.

Seven out of ten (70%) middle-income Americans age 55 and older report living comfortably within their budget. One in ten (9%) admit to living beyond their means.

When developing a retirement savings goal, only one-fifth (21%) of middle-income retirees and pre-retirees calculated a monthly retirement income goal number; only one in ten (13%) determined a total savings goal number to reach.

Nearly two-thirds (62%) of middle-income pre-retirees report some level of anxiety about retirement; one in four (28%) report being “anxious” or “very anxious.”

Nearly three-fourths (72%) of middle-income Americans say that Social Security benefits make up at least half or more of their retirement income, which exceeds the national average of 65%, according to the Social Security Administration.

Nearly one out of three (29%) count on Social Security for 75% or more of their retirement income.

For retirees with household incomes between $25,000 and $50,000, one in ten (10%) rely on Social Security for all of their retirement income.

One in three (34%) of those age 55 and older do not understand that delaying when they start to collect Social Security can increase their future benefit amount.

Nearly half (47%) of middle-income Americans age 55 and older incorrectly believe that an annual cost-of-living increase to their Social Security benefits is guaranteed.

More than one-third (36%) of middle-income Americans falsely believe that full Social Security benefits start with their 65th birthday.

One in three (35%) middle-income Americans age 55 and older who are not yet receiving Social Security do not know what their Social Security income will be when they retire.

Nearly eight in ten (78%) middle-income Americans age 55 and older are concerned about the future of Social Security.

More than one-third (38%) of middle-income Americans over age 55 do not believe Social Security as we know it will exist in 20 years.

Featured Charts & Data