Longevity literacy for individuals
Being longevity literate means understanding the implications of an increased lifespan on you, on your organization and on society.
At an individual level, longevity literacy is crucial when planning for retirement.
Without a correct understanding of life-spans and health-spans, it is difficult to ensure quality of life (in terms of health, finances, participation to society and lifestyle) during the “longevity years”.
A study by the TIAA Institute covering different age groups in the US found longevity literacy to be low and lifespan predominantly underestimated. As a result, 50% of individuals save for retirement without previously calculating how much they need to save over time to maintain financial security. If longevity literacy is underestimated, retirees will not be properly equipped to plan for time to be spent in retirement.
Financial literacy and longevity literacy are both positively associated with retirement readiness. People who are more longevity literate (measured in percentage of correct answers to a longevity literacy test) tend to save enough for a comfortable retirement. Data from the study also shows that retirees with high financial literacy are more likely to plan and save for retirement while still working compared to retirees with low financial literacy. On average, 72% of the sample saved regularlly before retirement, with the range going from 53% (people with low longevity literacy) to 90% (people with high longevity literacy).
Saved for retirement on a regular basis before retiring
% of P-Fin Index questions answered correctly
Sorce: TIAA Institute-GFLEC Personal Finance Index (2022)
Longevity literacy for women
In the UK it takes women 19 more years of work to retire with the same pension savings as men as men. The statistic may vary from country to country, but there is always a very significant gap. It is not only because of lower income (gender pay gap), but also because women spend more time outside the labor market due to care needs (of children, elders, sick) and maternity leave. Women should be aware of this and take it into account, particularly because they live longer than men and tend to be frailer in their last years of life.
Another aspect to be taken into account in women’s longevity planning is extra-longevity, by which I mean the years a woman is likely to survive her male spouse. This is due to women living longer than men, but also to the fact that, in the past, women tended to marry older men.
Longevity literacy for organizational leaders
Usually, leaders have a better access to information and more knowledge of macrotrends, so, in general, they are more longevity-literate. However, because they are leaders, their responsibility is wider. To begin with, organizational leadership can help to make the basics of longevity literacy and financial literacy available to employees through training, coaching and specialist support in retirement planning. Moreover, leadership can ensure that concepts such as the 4-quarters life and new retirement are known by employees of all ages. Finally, leaders can support a culture that respects and values people of all ages. I think these three things should be part of the CSR and wellness efforts of organizations.
Resources
- A very helpful and intuitive website to help people figure out how much to save for retirement https://www.retirementlivingstandards.org.uk
- This report by TIAA explores financial literacy and retirement readiness in the US https://www.tiaa.org/content/dam/tiaa/institute/pdf/insights-report/2023-01/longevity_literacy_financial_literacy_and_retirement_readiness.pdf
- Longevity Economy Principles:The Foundation for a Financially Resilient Future is a report by OECD offering insights on the challenges and opportunities of an ageing global population, with a focus on financial resilience of all generations. It can be downloaded here: https://www.weforum.org/publications/longevity-economy-principles-the-foundation-for-a-financially-resilient-future/