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As of 2022, the average life expectancy in the U.S. was 77.43 years, down from the pre-coronavirus high of 78.79 years. Working on the assumption that the average is reverted to, the average American will live slightly less than 79 years.
For the decade leading up to pandemic, that average changed only negligibly and the current, prevailing wisdom within the medical and scientific communities is that barring epic advances, U.S. life expectancy is likely to remain static for years to come.
Yet clients, particularly those that are older Gen Xers or baby boomers, are worried about outliving their assets and savings. Advisors know that this is a common concern – one that’s been around for decades. However, it’s being amplified against the backdrops of surging healthcare costs and inflation that has proven far stickier than hoped.
Translation: Medicare doesn’t cover everything and purchasing power has been eroded, meaning client concerns about outliving savings is credible and real. Advisors should take note.
Even Wealthy Clients Are Worried
Underscoring the intensity of the outliving savings concern, it’s one that’s felt by clients that can be described as “affluent” and even some that are close to high-net-worth territory. Consider the findings in the Global Atlantic Financial Group 2025 Retirement Outlook Survey, which queried respondents from 55 to 75 years old with $250,000 to $2 million in investable assets.
“The findings show 67% of these investors are concerned about their income lasting their lifetime, with 30% saying they are extremely or very concerned,” according to the research.
In addition to the aforementioned worries about healthcare and inflation, clients are also concerned about the ability of Social Security to fill gaps. Some even acknowledge they may be too dependent on that benefit.
“Seventy-six percent of respondents say they are concerned about Social Security’s ability to provide full benefits for life with 43% saying they are extremely or very concerned. In addition, 35% say they expect to rely ‘a lot’ on Social Security to cover expenses in retirement,” adds Global Atlantic.
Looking to Lifetime Income
More than three-quarters of those polled by Global Atlantic said they discussed lifetime income options beyond Social Security with their advisors, implying that annuities should be part of the conversation. Data confirm annuities sales have surged over the past couple of years and it could well be clients’ concerns about outliving income that’s contributing to that resurgence.
On that note, 46% of those questioned by Global Atlantic said they have spoken with their financial professionals about annuities. That percentage, which could increase over time, jibes with other data points, including the 65% of survey respondents that said income for life is their primary priority and the 56% that view asset preservation as more important than growth.
Advisors looking to boost their annuities business can take heart in knowing there’s a receptive audience for those products because clients aren’t just worried about Social Security. Those receiving defined benefit pensions are concerned about inflation eating away at the value of those benefits.
Related: Annuities Are Client Retention Tools