Many Want to Live to 100 but Worry about Affording Living Longer

AIG Life & Retirement, a division of American International Group, Inc. (AIG), a global insurance organization, kicks off an initiative by the releasing a survey to educate Americans to prepare for increased longevity.  As more seniors are living into their 80s, even 90s, more than one out of every two Americans has their sights set on even greater longevity. Medical advances and healthier lifestyles are making this happen.

According to AIG’s survey released in April by AIG Life & Retirement, finds a surprising 53 percent of the respondents say their goal is to live to 100 years. Thirty-nine percent cite deeper family relationships as the main benefit of living such a long life, 32 percent name seeing the world change and 17 percent want to remain productive.

Education Empowerment for Retirement. Photo Credit: www.Planfor100.com

According to AIG’s survey, even with the respondents wanting to live longer they expressed concerns if this occurred.  Fifty one percent say they are uncertain that their savings will last if they have a 100-year lifespan. Nearly six in 10 (59 percent) fear running out of money more than death.

Longer Lifespans Can Lead to Anxiety About Financial Security

“Living longer should be a cause for celebration, but for many, longevity can bring anxiety and financial uncertainty,” said Kevin Hogan, Chief Executive Officer, AIG Life & Retirement in an April 10 statement announcing the survey’s findings. “While no one can know if they will live to 100, they can plan for it. Our goal is to help educate Americans about the need to prepare for longer lives so they can achieve financial and retirement security,” says Hogan.

When the survey’s respondents were asked to identify their greatest concern about living to age 100, the potential for serious health conditions (35 percent) topped their list, followed by burdening their family (27 percent) and running out of the money needed to live comfortably in retirement (25 percent).

When considering financial concerns, generating lasting retirement income (23 percent) and the rising cost of healthcare (23 percent) tied as the most significant financial challenge Americans said they would face when planning for retirement. These challenges were followed by concerns about Social Security and Medicare (19 percent) and stock market volatility (19 percent).

Furthermore, with recent stock market volatility and December’s nearly ten percent stock market drop still fresh in consumers’ minds, 86 percent of Americans confess to anxiety about funding their retirement lifestyle through their retirement account investments, which typically include stock market exposure, as opposed to a guaranteed source of income.

While financing a long life is a concern for all, the burden weighs more heavily on the shoulders of female respondents—especially since they have longer projected life expectancies than men. The researchers found that the female respondents are significantly more anxious than men about funding their retirement lifestyle through their retirement account investments versus a guaranteed source of income (60 percent of women are somewhat or very anxious, compared to 47 percent of men).

 The researchers say that the study’s findings also showed that even a little more certainty can go a long way; six in 10 (60 percent) said $10,000 more per year of guaranteed retirement income would help ease their minds. Additionally, 75 percent of survey respondents said guaranteed income every year for life would give them greater levels of happiness and satisfaction in retirement. Certainty seems to have an even greater impact on female respondents, say the researchers.  Women were more likely than men to say they believe they would derive happiness from guaranteed income (women averaged 4.21 on a 5-point scale vs. men at 3.98).

“Retirement planning in the U.S. has yet to adequately adjust for an aging population, a decline in pension benefits, and longer lifespans,” said Todd Solash, President, Individual Retirement, AIG. “As a country, we have to face the fact that relying on savings alone will leave many at risk of running out of money during their golden years. We must fundamentally change how we talk about retirement and replace what has been more of a singular focus on savings with a broader perspective that also includes protected lifetime income sources like annuities as part of an overall retirement plan,” notes Solash.

Financial Professionals Key to Planning for Living Longer

Working with a financial professional can boosts confidence levels of survey respondents whose retirement years may span for decades.  When asked whether they believe their current retirement savings plan will sustain them financially until the age of 100, respondents with advisors are significantly more confident than those not having this resource.  Nearly half (45 percent) of those with advisors are very or extremely confident, compared to only 8 percent of do-it-yourselfers. In fact, working with an advisor allays financial fears about growing older; nearly two-thirds (64 percent) of respondents with an advisor say they want to live to 100, compared to only 37 percent of those without an advisor.

“Preparing financially for a long life is achievable if you have a financial plan,” said Robert Scheinerman, President, AIG Retirement Services (formerly known as VALIC). “Personal finance can be intimidating, but it doesn’t have to be. Working with an advisor can help you clarify goals, map out the future you envision and build a strategy for creating a secure retirement. For employers, there is a real opportunity to better educate and engage employees to help them create a financial plan and develop strong savings habits early in their career. Individuals, employers, financial advisors and legislators all have a part to play in ensuring Americans can achieve retirement security,” he says.

Survey respondents are also thinking about how they can ensure the financial security of their loved ones in the case where their life expectancy differs from their spouse.  The survey findings indicate that only 16 percent of respondents say they are extremely confident that their partner would be able to manage his or her spending from retirement savings if they were to die first.

“Planning for 100 means planning for the unexpected,” added Rod Rishel, Chief Executive Officer, Life Insurance, AIG. “For their peace of mind, Americans should be financially prepared to live to 100 while also taking steps to ensure the financial security of their loved ones in the event of an untimely illness, disability or death, especially if you’re the breadwinner,” says Rishel.

AIG Life & Retirement’s initiative, with its 100-year theme, complementing AIG’s centennial celebration, is launching a new website (Planfor100.com) and the Plan for 100 Podcast series can be accessed on this site as well as on iTunes, Google where Play, Spotify, Stitcher and sound cloud.  The podcast experts are charged with raising the awareness about the impact of increased longevity and to educate Americans about potential solutions.

The AIG 2019 Plan for 100 Survey was conducted online within the United States by Michael Finke, Ph.D., The American College of Financial Services, in December 2018 and January 2019 among 1,012 U.S. adults ages 40-74 who have at least $50,000 in retirement accounts.