Understanding Longevity continued on page 32 Better Grasp, Better Plan The main takeaway is that people with a strong grasp of how long retirement might last tend to plan for it better, Yakoboski says. Indeed, the survey found a correlation between longevity literacy and the more-established concept of financial literacy. About 80 percent of retirees with strong longevity literacy saved for retirement while they were still working, Yakoboski says. The figure was 60 percent for those with weak longevity literacy. One of the more striking findings was that women in general have better longevity literacy, though they lag in financial literacy, Yakoboski says. According to the survey, 43 percent of women had strong longevity literacy, compared with 32 percent of men. Longevity literacy also improves with age. Among Baby Boomers, 44 percent have strong longevity literacy, compared with 37 percent for Generation X, 32 percent for Millennials and 30 percent for Gen Z. The lack of knowledge has real-world effects. Retirees with a clearer sense of life expectancy are more likely to find that their lifestyle matches their pre-retirement expectations. Retirees with weak longevity literacy are more likely to struggle to make ends meet, according to the survey. It found that 28 percent with weak knowledge were having difficulty, compared with 12 percent of those with strong knowledge. People with strong longevity literacy also may be more inclined toward financial products that help ensure a more comfortable retirement, however long it lasts, Yakoboski says. The gender differences, meanwhile, have implications for married couples, he says. Oppositesex spouses are going to have different perspectives and knowledge levels as they approach retirement. “It really shouldn’t be one or the other making decisions on their own or having conversations with the financial planner,” Yakoboski says. He plans to ask more questions about longevity in future editions of the P-Fin Index. The next survey, for instance, will ask people to estimate their own longevity, not just the average. Other questions might assess how well people understand the chances they may live past 90 and gauge their understanding of longevity in the context of couples, Yakoboski says. The Broader View While the survey question focused primarily on an understanding of life expectancy, global policymakers have been considering the idea more broadly—as well as the challenges and opportunities posed by longer, healthier life spans. Groups working to popularize the concept of longevity literacy include the World Economic Forum, a Geneva, Switzerland-based organization that brings together public- and private-sector officials to tackle major world issues. Another is the Stanford Center on Longevity, which in 2018 launched an initiative called The New Map of Life. The map envisions changes in policy and lifestyle that would account for rising life expectancies. “We’ve talked over the years, over and over again, about financial literacy, and we continue to talk about financial literacy for good reasons,” says Andre Belelieu, the forum’s head of insurance, asset management and institutional investors. “But longevity literacy is a much more holistic view of how you’re going to retire.” For example, Belelieu says, longevity literacy captures the challenges and opportunities presented by the changing world of work. Existing retirement programs, for example, don’t always account for people in gig jobs or other kinds of contingent work arrangements. Technology, meanwhile, makes it easier for people to keep working. Longevity literacy also factors in health, a crucial quality-of-life issue that may be overlooked when the focus is strictly on savings. “These are the different things we’re trying to explain with longevity literacy,” says Haleh Nazeri, financial services platform coordinator for the forum. The World Economic Forum’s focus on the concept crystalized in 2020 at its annual meeting in Davos, Switzerland, where it brought together a cross-section of people from government, finance and human resources to discuss the concept, Belelieu says. The discussions evolved into an initiative that includes rethinking retirement, says Nazeri. The redesign touches not just the financial aspects of retirement—the aspects captured by the term “financial REVERSE MORTGAGE / MAY–JUNE 2023 31
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