Retirement Planning Faces Longevity Risk As Americans Live Longer

Advancements in health care mean that Americans are living longer than ever. Data from the National Center for Health Statistics shows that U.S. residents born in 2024 have an average life expectancy of 79, an increase of more than six months compared to 2023.

While a longer life span is positive news, it also means that Americans may have more difficulties in planning and sustaining retirement.

A new report from PLANADVISER outlines the steps that retirement plan sponsors and financial advisers should take with their clients given the need for longevity. Reverse mortgage professionals should be aware of these details as they incorporate home equity-based funding solutions into retirement plans.

According to federal data cited in the report, a 65-year-old man today can expect to live to 84 years old, while a 65-year-old woman can expect to live until 86.

“For plan sponsors and advisers, that translates into a potential distribution horizon of at least 20 to 30 years,” PLANADVISER explained. “Without incorporating realistic longevity assumptions into glide path design, withdrawal strategies and income solutions, participants face a heightened risk of outliving their savings.”

Differing perceptions

The outlet also cited a 2025 research paper from the TIAA Institute that attempts to address a gap in “longevity literacy.” TIAA concluded that “longevity literacy tends to be poor among U.S. adults,” as an accompanying survey found that only 32% of respondents correctly answered a multiple-choice question about the life expectancy of a 65-year-old. Another 35% underestimated this timeline and 24% said they didn’t know.

These discrepancies are based on differing perceptions of how long an individual expects to live. Seven in 10 respondents who overestimated the life expectancy of a 65-year-old think they’ll live to age 90 or beyond, while roughly the same percentage who overestimated don’t expect to live until 90.

This filters into retirement savings plans as 50% of those who expect to live less than 10 years after retirement are saving on a regular basis. Conversely, 70% of those who expect a retirement of 20 years or more save regularly, the survey found.

“The influence of perception is problematic since poor longevity literacy is synonymous with misperceptions,” TIAA reported. “Workers who expect relatively short lifespans due to misperceptions about population life expectancy are at risk of accumulating inadequate financial resources for retirement — their retirement planning horizon is ‘too short.’”

PLANADVISER used an example of two hypothetical people saving for retirement to illustrate the benefits of starting early in life. This is tied to the impacts of compound interest.

Both people saved $30,000 over a 20-year period and earned a 6% annual return. But the first person started at age 25 and stopped at 44, while the second started at 45 and stopped at 64.

At age 65, the person who began saving early would have $160,300, while the one who waited would have $49,970, due to the 20 additional years of compound interest growth.

The report encouraged workers to factor proper longevity expectations into their retirement plans by opening accounts early and capitalizing on employer-matching contributions.

Having the reverse mortgage conversation

Paul Fiore of HighTechLending recently explained to HousingWire’s Reverse Mortgage Daily that his conversations with senior clients about being financially prepared for retirement often center on destigmatizing the reverse mortgage product set.

“These conversations are happening every day, and it’s incumbent upon everyone who sells reverse mortgages to have a holistic conversation with the customer,” Fiore said.

“It’s not just, ‘Here’s how much money you qualify for and here’s how it works.’ How does it affect someone’s everyday life? I’m showing you a five-year or 10-year plan with a reverse mortgage, and how it’s supplementing your situation, so you’re not worried about the cost of goods and other things happening around you.”

Veteran financial adviser Ryan Ponsford spoke earlier this month about business relationships with reverse mortgage originators during a webinar hosted by Mutual of Omaha Mortgage.

Ponsford said the most fruitful relationships are typically formed with independent advisers who have fewer compliance constraints  — and with those who offer clients a written financial plan rather than specialized products like insurance. And he emphasized a listen-and-learn approach.

“A lot of loan officers talk too much,” Ponsford said. “As you move into those conversations, your first goal is to learn. … Advisers aren’t going to buy into your product. They’re going to buy into what it can do for their clients.”