Most Americans have a poor understanding of how long they will live and how much money they will be spending during that period. Respondents only got 33% of answers right on the 15-question "Retirement Income IQ Test."
"Misconceptions about longevity can have serious consequences on a retirement savings
plan," said Dr. Sandra Timmerman, director of the institute. Only 37% of respondents knew that a 65-year-old individual has a 50% chance of living to 85.
Consumers also underestimate their future income needs. More than half estimated that they will need between 20% and 50% of their current income. In fact, experts believe that figure should be between 70% and 100%.
The institute surveyed more than 1,200 people between the ages of 56 and 65 who estimate they will retire within the next five years.