Americans Expect to Reach 88, but Their Retirement Nest Egg May Run Dry by 83

Americans say they expect to live until age 88, yet they think their retirement savings will only carry them to about 83, according to new findings from life insurance technology company Ethos.

In a survey of 1,000 U.S. adults, 17% of respondents with retirement savings said they expect those funds to run out before age 80. When people without any retirement savings were included, that share rose to 47%.

A big part of the mismatch appears to be long-term care. Respondents estimated a nursing home would cost an average of $60,829 per year, or about 54% of the actual national average of $112,420 for a semi-private room, according to the Federal Long Term Care Insurance Program’s 2024 cost of care survey. The difference suggests many retirees may be underestimating care costs and could be left financially exposed, especially if they have not planned for extended care needs.

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Seeing the real cost of care also changed how long people thought they could afford to live. After being shown the nursing home figures, confidence in being able to afford living to age 80 fell across every generation surveyed. Gen Z respondents recorded the largest decline, from 61% to 51%, while confidence among baby boomers slipped from 67% to 62%.

Medicare generally does not pay for custodial long-term care, so retirees may have to depend on personal savings or other coverage to cover help with day-to-day activities over an extended period.

Many Americans misunderstand how their retirement savings work

The survey also showed widespread confusion about retirement accounts. Among respondents who have a 401(k), 40% believed the account would provide a monthly paycheck for life, even though a traditional 401(k) does not automatically guarantee that kind of income.

That share increased to 48% among people who said a 401(k) is their main retirement savings vehicle.

At the same time, 66% of respondents said they would rather have a smaller guaranteed income for life than a larger retirement balance that might eventually be depleted. Another 33% said they would convert about half of their retirement savings into guaranteed income if they could, while 29% said they would convert a quarter.

Even with worries about outliving their savings, Americans also seem hesitant to scale back the money they hope to leave to family members. If told they would live to 95, 36% said they would keep working longer and another 36% would downsize or reduce their lifestyle. Only 4% said they would reduce their planned inheritance.

Notably, more respondents were concerned about dying too soon (47%) than about outliving their money (29%), pointing to the competing financial worries people face when planning for retirement.