Study: People underestimate how long they will live

Do you think you'll make it to 75? That was the question that the massive Health and Retirement Survey posed to 26,000 Americans over the age of 50 in 1992.

Specifically, the researchers asked respondents to guess their odds of living to age 75: 10 percent? 50 percent? 100? Now, nearly 25 years later, researchers can evaluate how well the respondents did at guessing their chances of living that long -- simply by counting how many of those people actually made it to 75.

In general, people wildly underestimated their chances of reaching 75. Seven percent of respondents said there was simply no way they'd live to 75 -- they gave themselves a zero percent chance of living that long.

But in fact, nearly half of this group lived to 75 -- or longer. Among people who gave themselves 50-50 odds, 75 percent saw their 75th birthday.

These numbers come from a fascinating new Brookings Institution study on longevity and retirement planning. You'll notice that there is a bit of a relationship between how long people thought they'd live, and how long they actually lived - people who gave themselves better odds of living to 75 were indeed more likely to live that long. This relationship has been noted by researchers before.

But what the Brookings researchers note, with some degree of alarm, is the big gap in most cohorts between their expected and actual lifespans. "Individuals do not fully understand the longevity risk they face," write authors Benjamin Harris and Katharine G. Abraham.

While as a society we are somewhat obsessed with the risks of dying, we're less accustomed to consider the risks of living long -- of outliving our retirement savings.

With lifespans increasing and Social Security on shaky financial footing going forward, people are going to be depending more on their personal savings and retirement accounts to support them through old age. In order to assess how much money we'll actually need, we first need to have a realistic sense of how long we'll live. The Brookings study suggests that many of us still have some work to do on that front.