Testing methods to enhance longevity awareness
Many people have only a vague notion of the concept of longevity risk, which in turn implies they are likely to save too little for retirement and have a low demand for longevity insurance products.
Retirees need to have some idea of how long they will survive to make informed decisions about drawing down retirement savings, claiming Social Security and pension benefits, and purchasing annuities. This is not a trivial task for many people due to low financial literacy, cognitive shortcomings, and behavioral biases. This paper seeks to understand how individuals estimate and then use subjective survival probabilities when making long-term financial decisions.
To evaluate ways to enhance awareness of longevity risk while controlling for all other related variables, the authors developed, fielded, and analyzed a nationally representative online survey of Americans using the Prolific “crowd-working” platform.