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How Lower Life Expectancy Could Put Your Retirement at Greater Risk


When it comes to saving and investing for retirement, one of the biggest challenges is figuring out how much money you’ll need to live out the rest of your life comfortably. There’s no telling how long you might end up living. Add in a spouse, children and other dependents, and the calculation become even more complex. However, the COVID-19 pandemic has decreased life expectancy, leading many to think that they don’t need to save as much for retirement. While that may seem intuitive, you’ll probably want to avoid that line of thinking for a couple reasons.

If you’re rethinking retirement goals, a financial advisor may be able to help. Check out SmartAsset’s free advisor matching tool to find advisors who serve your area.

COVID-19 and Life Expectancy

There’s no way around it. The COVID-19 pandemic has decreased life expectancy across the world. Recently, the Centers for Disease Control and Prevention (CDC), using a measurement known as period life expectancy, announced a final estimate of a 1.8-year decrease in life expectancy due to the effects of the COVID-19 pandemic.

According to a study done by, the average annual spending by retirement age Americans in 2020 was $47,579. So while a 1.8-year decrease in life expectancy may not seem significant, living 1.8 fewer years into retirement would result in the average retirement-age American spending nearly $86,000 less.

How Americans Might Be Interpreting the Data

lower life expectancy and retirement

Of course, $86,000 is no small amount of money. While it may be bad news that life expectancy has dropped, for some Americans that translates to less of a need to save as much for retirement. After all, fewer years lived means fewer expenses and less of a need to save additional money for retirement.

It’s also common for people to take information on dwindling life expectancy rates and use it as a reason to live more in the moment. Due to a behavioral bias known as discounting, people tend to value things in the present more than things in the future. Pointing to diminished life expectancy has the potential to exacerbate this dynamic, leading to a further reduction in retirement savings.

Why the Data Is Misleading

However, you shouldn’t go ahead and change your retirement saving strategy just yet. The American Academy of Actuaries recently released a policy brief signaling that the CDC life-expectancy report may need to be taken with a grain of salt.

More specifically, the brief calls to attention the fact that life expectancy dips from the COVID-19 pandemic aren’t expected to continue indefinitely. The brief suggests that life-expectancy rates are likely to rebound to their pre-pandemic rates and are merely temporary impacts that will fade over time.

What You Can Do

If you haven’t changed your retirement saving and investing strategy to reflect a lower life expectancy, you’re headed in the right direction. Simply put, the best thing to do with this information is to continue saving and investing for a lengthy retirement. Of course, there’s no guaranteeing how long you’ll live, but it’s never a bad idea to be prepared. Even when faced with information about lower life-expectancy rates, you should still aim to have plenty of money to get you through retirement.

If you haven’t yet started saving and investing for retirement, or if you think you could be doing more, don’t fret. There’s no better time to start than right now, and you should make sure that you’re putting yourself in a position to be able to fund all of your retirement needs. If you’re looking for help planning for retirement, try using SmartAsset’s free financial advisor matching tool.

Bottom Line

lower life expectancy and retirement

COVID-19 has decreased life expectancy across the world, so it makes logical sense that the average person might assume he or she doesn’t need to save as much for retirement. However, you should try to avoid this train of thought, despite its intuitive appeal. There are lots of different factors that can impact how long you’ll live into retirement, and the last thing you want is to be in a position where you don’t have enough money to support yourself and your family.

Tips on Retirement Planning

  • A financial advisor may be able to help you ensure you have enough money to retire on. From saving to investing to budgeting, it can be a huge help to have a financial professional in your corner. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Retirement planning is never easy, so it’s a good idea to do your research. SmartAsset can help, with a number of free online retirement resources. For example, check out our retirement calculator today.

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