Economy Concerns and Lack of Awareness of Longevity Impacting Retirement Planning

Longevity has many consequences, yet more than one-half of American adults lack a basic understanding of how long people tend to live in retirement. This lack of awareness can keep people from saving enough money to last as long as they live. The need for preparing for longevity and long-term health care has never been greater.

Combining this lack of awareness, along with their concerns about the economy and inflation, can have a devastating impact on someone's retirement in the years and decades ahead.

An annual survey of more than 3,500 people nationwide by the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington (GW) University School of Business asked respondents about the life expectancy of Americans who are 60. The results show this lack of longevity awareness.

The Personal Finance (P-Fin) Index is an annual survey of more than 3,500 people nationwide by the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington (GW) University School of Business that serves as a barometer of financial awareness.

60-Year-Old May Live More Than 20 More Years

More than half (53%) said they didn't know or underestimated how long they'd live, and only 37% of those surveyed knew the correct answer.

American men and women, on average, retire in their mid-60s. However, a lot of them are not aware that the Social Security Administration estimates that at age 60, males may live an additional 22 years and women an additional 25 years.

Surya Kolluri, head of the TIAA Institute, says that longevity literacy is an overlooked factor in addressing retirement preparedness.

If you don't have a realistic understanding of how long you are likely going to live, you are missing one of the most foundational components of any plan: a time horizon. If we can improve people's longevity literacy, we can help create better retirement plans and increase their confidence.

Not on Track with Retirement

Only 40 percent of Americans in the workforce believe they are on track with their retirement savings. Meanwhile, U.S. News and World Report surveyed 2000 people about their retirement planning. Inflation and economic uncertainty have made many people more cautious about retirement planning. 

According to survey findings, 50 percent of participants said they had to put their retirement savings on hold at some point in 2022. In addition, 41% of those polled no longer make contributions to 401(k)s or other types of retirement plans.

The study showed that 50 percent of respondents anticipated halting retirement preparation in 2022. Additionally, 41 percent of those surveyed say they no longer contribute to 401(k)s or other retirement plans.

Inflation Shock Then—Lasting Impact Now

In 2022, inflation and economic uncertainty forced many Americans to rethink their future. According to the original research, 72% of respondents revised their retirement plans, with 27% making significant changes to their goals and strategies. That moment wasn’t temporary—it marked the beginning of a longer shift in how people approach retirement.

As of 2026, the ripple effects of that period are still being felt. 

What Changed Since 2022

While inflation has cooled from its peak, it hasn’t disappeared. Data from the U.S. Bureau of Labor Statistics shows that the cumulative impact of higher prices over the past several years has permanently raised the cost of living.

At the same time:

• Interest rates remain elevated compared to pre-2022 levels
• Housing, healthcare, and everyday expenses continue to strain budgets
• Market volatility has forced many to rethink withdrawal strategies

The result? The adjustments people made in 2022 have largely stuck—and, in many cases, deepened.

How Retirement Planning Has Evolved

What began as short-term reactions has turned into long-term strategy shifts:

• More Americans are delaying retirement or planning to work longer
• Savings targets have increased due to higher expected expenses
• Investment strategies have become more conservative for those nearing retirement
• There is greater focus on guaranteed or predictable income sources

The 27 percent who made major changes in 2022 were early indicators of a broader trend that is now mainstream.

Many People May Not Have Enough Money for Retirement

You combine that many people underestimate longevity and have slowed down their retirement funding; the results in the decades ahead can mean people may not have enough funds to enjoy their future retirement. Former George Washington University Professor Annamaria Lusardi said their 2022 research showed that if people want to create better retirement outcomes, they need to understand how long they are going to live once they retire.

Along with making it easier for people to access quality retirement plans and save appropriately, raising the rate of longevity literacy is a clear and urgent need for our country.

The TIAA/George Washington University survey showed that those who were aware of longevity were ahead in retirement planning compared to those who were unaware:

• 81% saved for retirement while working, compared to 57% of those with poor longevity literacy.
• 54% have tried calculating the overall amount they need to save, compared to 30% of those with poor literacy.
• 40% find it easy to make ends meet – almost twice as many as those with poor literacy (23%).
• 40% are confident about having enough money to live comfortably throughout retirement, compared to 25% of those with poor literacy.
• Only 17% said they have a lifestyle that falls short of pre-retirement expectations. For those with poor literacy, more than twice as many (37%) agreed.

Economy Outlook: From 2023 Optimism to 2026 Reality

Back in 2023, sentiment about the economy was mixed. A U.S. News & World Report survey found that 57 percent of respondents expected the economy to strengthen by year’s end, while 43 percent anticipated it would weaken. Even among optimists, only 13 percent believed conditions would become significantly stronger. Still, 61 percent felt their retirement outlook would improve.

Fast forward to April 2026, and the economic picture has evolved—but uncertainty remains a defining theme.

Recent data from the U.S. Bureau of Economic Analysis and Federal Reserve shows:

• Economic growth has been steady but uneven, with periods of slowing tied to higher interest rates and global instability.
• Inflation has moderated from its post-pandemic highs but remains a concern for retirees living on fixed incomes.
• Interest rates, while stabilizing, remain elevated compared to the ultra-low levels of the early 2020s.
• Market volatility continues to impact retirement portfolios, particularly for those nearing or in retirement.

As a result, confidence in retirement readiness has become more cautious than optimistic.

Retirement Confidence Has Softened

While many Americans in 2023 believed their financial outlook would improve, more recent surveys in 2025–2026 suggest a shift:

• A growing number of adults now expect to delay retirement, citing inflation, healthcare costs, and market uncertainty.
• Confidence in having “enough saved” has declined, particularly among those age 50+.
• Concerns about outliving savings have increased, especially as life expectancy remains in the late 70s and beyond.

Generational Divide: Concerns Persist—and Deepen

The generational concerns highlighted in 2023 have not only persisted—they’ve intensified.

Earlier research showed:

• 79% believed Millennials would not retire before age 65
• 80% believed the same for Generation Z
• 88% felt the next generation would have a harder time retiring

As of 2026, those views remain largely unchanged, but with sharper urgency:

• Millennials are now entering peak earning years but face higher housing costs, student debt, and caregiving responsibilities.
• Generation Z is entering the workforce during a period of economic uncertainty and high cost of living.
• Both groups are increasingly skeptical about traditional retirement timelines.

Recent polling from organizations like Gallup and Pew Research Center indicates that:

• Younger workers expect to work longer or rely on alternative income sources in retirement.
• Fewer believe Social Security alone will be sufficient.
• There is growing awareness of the need for personal responsibility in retirement planning.

What This Means for You

The shift from 2023 optimism to 2026 realism highlights a key takeaway:

Economic conditions may improve or decline—but your retirement security cannot depend on predictions alone.

If anything, the past few years reinforce the importance of:

• Diversifying income sources in retirement
• Planning for rising healthcare and long-term care costs
• Protecting assets from market downturns and unexpected expenses
• Taking action earlier, while options and affordability are still in your favor

The question isn’t whether the economy will improve—it’s whether your plan is strong enough no matter what happens next.

Ongoing Concerns: Recession Risk and Social Security Uncertainty

In 2022, rising inflation and fears of a downturn weighed heavily on Americans. At the time, 82 percent of survey respondents said they were concerned about how a potential recession could impact their retirement savings and plans. More than half (57%) reported losing sleep over financial worries, with inflation and lingering pandemic effects driving much of that anxiety.

As of April 2026, those concerns have not disappeared—they’ve evolved.

While the U.S. has avoided a prolonged recession, economic uncertainty remains. Data from the Federal Reserve and recent consumer sentiment surveys show:

• Many Americans still fear a late-cycle slowdown or mild recession
• Inflation, though lower than its 2022 peak, continues to pressure household budgets
• Market volatility and higher interest rates have reshaped retirement planning strategies

Sleep disruption tied to financial stress also remains a real issue. Recent research from groups like the American Psychological Association continues to show that money is one of the leading sources of stress for adults, particularly those nearing retirement.

Social Security: Modest Relief, Long-Term Questions

One of the biggest concerns—both in 2022 and today—is the future of Social Security Administration benefits.

In 2023, beneficiaries received a significant 8.7 percent cost-of-living adjustment (COLA), one of the largest in decades, designed to keep pace with inflation. Since then:

• COLA increases in 2024–2026 have been more moderate as inflation cooled
• Benefits have helped retirees maintain purchasing power—but not fully offset rising healthcare and housing costs

For those still working and planning retirement, concerns have intensified rather than eased.

According to the most recent Trustees Report (2024 update):

• The Social Security trust funds are projected to be depleted around 2034–2035
• If no legislative changes occur, payroll taxes would still cover about 75%–80% of scheduled benefits

This means Social Security is not “going away,” but future benefits could be reduced without reform.

Working Longer Is Becoming the Expectation

Even in earlier surveys, 65 percent of respondents expected they would need to work in retirement. That trend has strengthened:

• More Americans now anticipate phased retirement or part-time work
• Rising longevity and healthcare costs are key drivers
• Fewer people view Social Security as a primary income source—it is increasingly seen as a foundation, not a full solution

At the same time, confidence in understanding Social Security remains high. However, that confidence does not always translate into accurate planning, especially when it comes to:

• Timing benefits for maximum value
• Coordinating spousal benefits
• Accounting for taxes and inflation

What This Means for You

The core concerns from 2022—economic instability, inflation, and Social Security uncertainty—are still relevant in 2026. The difference is that they are now less theoretical and more tangible.

If you’re planning for retirement, this environment reinforces several realities:

• You may need multiple income streams, not just Social Security
• Market swings can impact timing and withdrawal strategies
• Longer lifespans increase the risk of outliving savings
• Government programs provide support—but not certainty

The bottom line: uncertainty isn’t new, but it is persistent. The more control you take over your planning today, the less dependent you’ll be on forces you can’t control tomorrow.

Retirement Planning Has Shifted Since COVID—But Key Risks Remain

A majority of Americans reassessed their retirement plans during the COVID-19 crisis. That shift has continued through 2026, shaped not just by the pandemic, but by inflation, market volatility, and longer life expectancy. Whether you believe COVID-19 is fully behind us or not, one reality hasn’t changed: you are still aging, and retirement is still coming. Being prepared is no longer optional—it’s essential.

What remains largely overlooked in many retirement discussions, however, is the cost of long-term care.

Earlier research often failed to fully address healthcare expenses beyond traditional coverage. That gap still exists today. Programs like Medicare and private health insurance provide limited, short-term coverage for skilled care, but they do not pay for ongoing assistance with daily living activities such as:

• Bathing
• Dressing
• Mobility
• Meal preparation
• Supervision due to cognitive decline

These services—known as long-term care—can last for years and have a significant financial impact. According to the U.S. Department of Health and Human Services (HHS), about 56 percent of Americans will require long-term services and supports (LTSS) that meet the federal definition of care (help with two or more activities of daily living or cognitive impairment).

Medicaid Misconceptions Persist

Some people assume Medicaid will cover long-term care costs. In reality, Medicaid is a means-tested program, meaning:

• You must have limited income and assets to qualify
• Many individuals must spend down most of their savings before becoming eligible
• Choices for care settings and providers may be limited

For many middle-income families, relying on Medicaid is not a preferred or practical strategy.

Long-Term Care Insurance: Underused but Critical

Long-Term Care Insurance remains one of the few solutions designed specifically to address these risks.

• Insurers paid $16.8 billion in benefits in 2024, according to industry data (AHIP, 2025 report)
• Coverage provides tax-free benefits that can be used for care at home, in assisted living, or in nursing facilities
• Policies are medically underwritten, meaning eligibility depends on your health at the time of application

A common misconception persists: that you can wait until you are older or already need care to purchase coverage. In reality:

• Most people obtain coverage in their 40s or 50s
• Waiting too long can result in higher premiums—or denial of coverage altogether

Costs Are Rising—And They Vary Widely

Long-term care costs continue to increase nationwide, driven by labor shortages and rising demand. Costs also vary significantly based on location and type of care.

The LTC News Cost of Care Calculator remains one of the most comprehensive tools to estimate current costs based on your ZIP code, reflecting real-time provider data across the country.

The Real Risk: Longevity, Inflation, and Family Burden

Longer lifespans, persistent inflation, and market uncertainty are placing increasing pressure on retirement savings.

Without a plan for long-term care:

• You may need to liquidate assets during market downturns
• Retirement income can be quickly depleted
• Family members often step in as unpaid caregivers—adding emotional, physical, and financial strain

Today, more than 63 million Americans provide unpaid care to loved ones, a number that continues to grow. The lessons from COVID-era planning still apply—but the stakes are higher now. Longevity is not just a gift; it is a financial challenge you must prepare for.

Planning ahead—while you are still healthy and have options—can:

• Protect your income and assets
• Give you more control over where and how you receive care
• Reduce the burden placed on your family

Start your research by reviewing the LTC News Long-Term Care Insurance Learning Center.