Mind your gap: individuals underestimate their life expectancy

Assessing one’s own life expectancy is becoming increasingly important as pension reforms worldwide shift more pension risks to individuals. A relevant question in retirement planning is therefore: do individuals have an accurate idea of how long they will live? And do they take future life expectancy improvements into account? To examine this question, we conducted in June 2024 a survey among a representative cross-section of the Dutch population and matched the individual respondents’ assessments in terms of (1) the probability of reaching the age of 90 years or older as well as (2) their expected age of death. These subjective expectations were compared with the age- and education-specific projections from expert demographers from Statistics Netherlands. In general men and women of working age tend to underestimate their chances of living up to the high age of 90. A noteworthy result is that in particular higher educated women substantially underestimate their chances of reaching 90 years of age. The findings imply that both men and women tend to underestimate their life expectancy and tacitly do not take account of the progress in life expectancy that expert demographers expect based on scientific research. The underestimation of life expectancy is of considerable importance in societies where specific groups on the labor market (e.g., self-employed) have to make their own decisions in matters of pension savings.