A new survey from life insurance technology firm Ethos indicates that U.S. adults anticipate their retirement savings will be exhausted five years before they expect to die. The poll of 1,000 Americans found that while the average respondent hopes to live to 88, they believe their finances will only support them until age 83. Notably, 17% of respondents expect their savings to run out before age 80, and when including those with no retirement savings, that figure jumps to 47%.
The findings come as financial advisors grapple with growing concerns about longevity risk and the limitations of employer-sponsored retirement plans. The gap between life expectancy and financial readiness is a central challenge for retirement planning, as highlighted in recent analysis of the $1.25 million savings gap retirees face.
Nursing home costs vastly underestimated
The survey's most striking data point involves long-term care. Respondents estimated the annual cost of a nursing home stay at an average of $60,829, which is only about 54% of the actual figure. According to the Federal Long Term Care Insurance Program's 2024 Cost of Care Survey, conducted by illumifin for the U.S. Office of Personnel Management, the national average for a semi-private room is $112,420 per year.
This discrepancy has significant implications for advisors helping clients plan for later years. Confidence in affording life to age 80 dropped across all generations once respondents were presented with real care costs. Gen Z saw the sharpest decline, from 61% to 51%, while baby boomers fell from 67% to 62%. Many middle-class Americans mistakenly plan to rely on Medicare for custodial care, which it does not cover.
Misunderstanding of 401(k) plans
The survey also reveals widespread confusion about how defined contribution plans function. Among Americans with a 401(k), 40% expect it to provide a monthly check for life, a feature that traditional 401(k)s do not automatically offer. Among those who consider a 401(k) their primary retirement vehicle, that figure rises to 48%.
This misalignment between expectations and reality is a known pressure point for advisors. Longevity risk, rather than market risk, is often flagged as the most financially consequential threat retirees face. The survey supports this: 66% of respondents said they would prefer a smaller guaranteed paycheck for life over a larger balance that could run out. If given the option, 33% would convert roughly half their retirement savings into a guaranteed income stream, and 29% would allocate a quarter.
Heirs prioritized over self-funding
Despite anxiety about outliving their money, respondents showed a strong preference for protecting heirs over cutting their own spending. If told they would live to 95, 36% said they would work longer, and 36% would downsize or reduce their lifestyle, but only 4% would reduce what they plan to pass on to family. This ordering has practical implications for estate and income planning, as clients who resist drawing down savings may leave themselves exposed to the very long-term care costs they underestimate.
The survey also found that more Americans worry about dying too soon (47%) than about outliving their money (29%), reflecting a shared concern about the financial security of loved ones left behind. For advisors, the data offers a concrete entry point: clients are already aware of the gap between hope and expectation, but many have not seen the real numbers for the care that gap often involves. As HSBC research shows, even affluent investors face significant shortfalls, and healthcare costs in retirement continue to rise.
