Why do people underestimate their longevity?

Apr 25, 2016 | BLOG

By: Douglas Anderson, Founder of Club Vita

In recent months, we’ve had the final curtain calls of several great entertainers. David Bowie (69), Lemmy from Motorhead (70), Alan Rickman (69), Terry Wogan and now Victoria Wood (62) all departed their mortal coils early.

The media has been full of a national outpouring of grief. It has prompted a great nostalgic interest in their work, particularly by those, like me, whose memories are defined by their work. My own cassette recording of Ziggy Stardust was worn down from excess play as a teenager.

Now I’ve grown up, my day job is helping people plan for comfortable retirements. One of our challenges is that people typically under-estimate their life expectancy (as shown by our own Reality Cheque survey). This is a concern now that more of us are personally responsible for our own retirement planning.

It’s natural to expect a range of answers when you’re estimating, but typically you would get half too low and half too high. The five year underestimation by men (eight years by women) suggests that 8 in 10 people could run out of money in retirement. And even if you guessed the average correctly, many will live considerably longer than the average: around 1 in 10 living ten years longer than their expectation. As typically people would want to be at least 90% confident of not running out of money, we could be looking at having to stretch savings to cover an extra 15 years of retirement.

Ever wondered why the under-estimation happens?

Maybe we’re just a nation of pessimists? Although Brits may be world champions of dark humour, international surveys of well-being suggest we’re a pretty contented nation, coming closer to the bunch of happiest countries (Switzerland and Iceland)[1] than those with least satisfaction (Hungary & Greece).

I suspect the real answer lies in the way that we process good and bad information.

Sad news on early death makes a big impact. The passing of a loved one is a big personal event. My My 79 year old mother talks about having a busy week for funerals, as she studies the “hatches, matches and dispatches” column of the Dundee Courier.

The death of the likes of Bowie and Wogan makes the national news headlines. Imagine you totted up the average age of all people whose deaths are reported in the papers. That approach will inevitably underestimate life expectancy because we currently have relatively few older people in our population. Indeed three of our four show business stars were born shortly after the end of the 2nd world war – in the first year of the baby boom. But that does not mean that their stories become the norm. These are still exceptional events.
For all these reasons, the information on death is high in our consciousnesses.

So, how do you get information on how many people didn’t die?

Do you could count the number of birthday cards you send to your contemporaries? If you’re like me, the answer is not enough.

Do you know what proportion of our people live beyond the biblical yardstick of threescore year and ten[2] (age 70)?

Sadly, the answers to these rather nerdy questions would not sell many papers, creating an imbalance in available information. The underappreciation of life expectancy improvement has serious effects for the stability of our society. I have observed at first hand the painful effect of this bias in waves of public sector pension reforms discussions. And now we have the freedom and choice environment for defined contribution schemes.

I learned recently that psychologists have observed this phenomenon in the way that we information sources cause exaggeration of other risks, like the likelihood of plane crashes. They call it the “availability bias[3]”.

Although I did not have a name for it, for the last 8 years Club Vita has been working hard to provide objective and trusted data on survival patterns and trends. But how you deliver the information also matters. Here are five communication techniques that I have found help to get the information across in an engaging way:

1. Pause to look backwards: Over the lifetime of a 65 year old, we’ve seen the likelihood of a 65 year old surviving to 75 rise from 6 in 10 to 8 in 10 for the average man and from 7 in 10 to 9 in 10 for the average woman. Put another way, the likelihood of dying between 65 and 75 has halved over the lifetime of someone born in 1949. That strikes me as a pretty remarkable change (and a good return on society’s investment in the National Health Service from 1948 onwards). More on this can be found in my annuities decomposed blog.

2. Target communications at workers in their 50s. Most highly engaged in retirement planning, and also have the opportunity to modify their plans. Use employers, pension trustees and social media, rather than traditional news media to convey the message. Use trusted and relevant data on changes in survival patterns.

3. Make the story relevant by personalising the statistics as much as possible. People don’t relate themselves to national averages. Try Club Vita’s Mr Predictor for a best estimate of your life expectancy.

4. Focus on emerging health stories. People naturally relate to changes – like medical breakthroughs – that may their affect their own lives. The biobank longitudinal study, which is following some 500,000 middle aged people, is starting to produce some valuable resources, like the ubble tool which estimates your chances of surviving beyond 70, based on your lifestyle and family history.

5. Publicise (loudly) exceptional living examples of long life. When Princess Elizabeth came to the throne in 1952, she issued 252 telegrams to new centenarians. The Department for Work & Pensions estimates that 6,000 British people will celebrate their 100th birthdays this year. The Queen is celebrating her 90th birthday today. If she follows her mother’s footsteps and lives beyond 100, she will be issuing a projected 18,000 birthday cards. We do hope that she’s sending e-cards! So, within the space of a lifetime, the number of British people living to 100 has multiplied by a factor of seventy.

What are your top tips for a more positive appreciation of our nation’s step change in longevity?

Douglas Anderson
Founder of Club Vita

Douglas Anderson

Founder of Club Vita

Douglas is currently focusing on growing appreciation of the powerful insights into longevity patterns and trends that Club Vita’s longitudinal database generates. Aside from Club Vita, Douglas also founded Hymans Robertson’s Life and Financial Services practice in 2011, assisting life insurers, asset managers and banks manage their risks more effectively. He specialises in longevity, fuller working lives, enterprise risk management, risk communication and risk visualisation.