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Adults are living longer, but there’s a caveat: Their retirement funds aren’t keeping up with their longer lifespans, according to a recent report.
John Hancock’s Longevity Preparedness Index (LPI), which was developed with MIT AgeLab, revealed that U.S. adults are largely underprepared to live well as they age. The index measures how much Americans are going to thrive later in life across eight key domains: social connection, daily activities, care, home, community, life transitions, health and finance.
Based on a survey of more than 1,300 adults, respondents scored an average of 60 out of 100 overall, indicating that most adults are not adequately prepared for longer lives. They are falling short in critical areas such as care, housing, finance and health. Some groups, particularly women and caregivers, had stronger preparedness across several of these dimensions.
The LPI study examined retirement preparedness across eight domains of longevity. (iStock)
The population of people at least 65 years or older is estimated to rise from 58 million to 82 million by 2050. However, the index shows that almost four in 10 people will face financial instability as they age.
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The biggest blind spot identified in the LPI study was that few American adults know who will care for them as they age or how they’ll afford that care, and many haven’t had conversations with family or loved ones about it.
The study found that respondents scored a 42 in care preparedness, which was the lowest score of the eight domains analyzed.
John Hancock CEO Brooks Tingle said the results of the inaugural LPI show that “while some people are preparing for longer lives, there is much more our industry can and should be doing to help customers.”
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The aging of America’s population has shown challenges in saving for retirement. (iStock)
Dr. Joe Coughlin, founder and director of the MIT AgeLab, said that the LPI’s results “underscore that taking some small but intentional steps — such as planning for a new hobby, starting a fitness routine or having a conversation about care — can lead to a better future and make a big impact on how we spend our later years.”
John Hancock and the MIT Age Lab will update the LPI annually over the next four years to monitor changes in the indicators the study is tracking, and its findings will be used to unlock opportunities to improve longevity.
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Social Security helps keep retirees out of poverty. (iStock)
Bankrate financial analyst Stephen Kates told FOX Business it is “no surprise that many Americans aren’t fully prepared for retirement and the challenges it brings.”
“Retirement has evolved into a life stage of its own, often lasting multiple decades for many individuals and couples. Rather than serving as the quiet final chapter of life, it has become a vibrant second (or even third) act for millions who want to travel, start businesses, volunteer or finally pursue long-delayed hobbies,” Kates added.
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He went on to say that with increased longevity comes an increased challenge of financing a retirement that may last 20 to 30 years, noting that “making intentional decisions about where and how to live can significantly improve retirement readiness.”
