Americans question whether retirement plans can keep up with longer lives

Americans are questioning whether retirement planning can keep up with longer lives, rising healthcare costs and the risk of running out of money. (AI-generated image)

By Noah Lopez

Americans are concerned about whether their retirement plans can keep up with longer lives, rising healthcare costs and the possibility of running out of money, according to recent research from TIAA, LIMRA and Fidelity Investments.

A TIAA survey of 1,000 U.S. adults found that 43% are not confident traditional retirement planning adequately accounts for longer lifespans. Seventy-seven percent identified rising healthcare costs as a direct threat to their retirement plans, while 53% said their primary retirement concern is withdrawing too much and running out of money before death.

Tim Pitney, head of lifetime income distribution at TIAA, said traditional retirement planning has often centered on accumulating a target amount of savings rather than determining how that money will provide income throughout retirement.

The traditional approach has been to reach a certain savings amount, retire around age 65 and expect the money to last, Pitney said. But people do not know how long they will live, while market volatility, interest rates, inflation and rising costs can affect the amount of income their savings can provide.

At age 65, men are expected to live into their 80s. With a couple, one person is expected to live to about age 94 on average, Pitney said.

The TIAA survey found that 46% of respondents worry about being able to afford basic day-to-day living expenses if they live longer than expected. Another 42% worry about having insufficient disposable income to enjoy additional years of life, while 41% are concerned about high long-term medical, memory or nursing care costs.

Healthcare costs add to retirement concerns

Healthcare and long-term care costs were also identified as significant retirement risks in separate research from LIMRA and Fidelity Investments.

A study released in April by the LIMRA Retirement Income Institute identified healthcare costs, long-term care needs and caregiving responsibilities as leading threats to retirement security. More than three-quarters of U.S. adults live with at least one chronic illness, according to the study, while more than half have multiple chronic conditions.

Many Americans may spend 10 to 12 years managing chronic illness or disability later in life, the LIMRA study found. Long-term care expenses can exceed $100,000 a year and are often not covered by public programs.

Fidelity Investments estimated in July that a 65-year-old retiring in 2026 can expect to spend an average of $185,500 on healthcare and medical expenses throughout retirement, excluding long-term care.

The estimate increased 7.5% from the previous year and includes Medicare premiums, deductibles, coinsurance and prescription drug expenses. Fidelity attributed the increase to higher healthcare costs, increased utilization and rising expenses associated with chronic conditions.

Pitney said retirees need to consider long-term care as part of their overall retirement planning. Consumers can choose to self-insure those costs, use retirement assets to pay for care or purchase long-term care insurance, he said.

The TIAA survey also found that 30% of respondents worry about becoming a financial burden on their children or other family members if they live longer.

Retirement income remains a concern

The concern about running out of money reflects a retirement-planning question that is different from simply accumulating savings, Pitney said.

Workers must determine how much income they will need after leaving the workforce and how long that income will need to last. Pitney said guaranteed lifetime income can be used for basic expenses, while other retirement assets can be used for discretionary spending and healthcare or long-term care.

The shift from defined benefit pensions to defined contribution plans such as 401(k)s has also changed how workers prepare for retirement, Pitney said.

Defined benefit pensions provided lifetime income, while defined contribution plans generally require individuals to accumulate savings and make decisions about how those assets will be used in retirement.

The TIAA survey found that 90% of respondents believe all Americans should have access to retirement savings accounts as well as resources and education to help them prepare for retirement.

TIAA said 12% of retirement plans currently offer a lifetime-income option, while 40% are considering one. Pitney said workplace plans can incorporate automatic enrollment, automatic contribution increases and lifetime-income options.

AI creates another area of uncertainty

The TIAA survey also examined how Americans expect artificial intelligence to affect their retirement, both through changes in the workplace and through healthcare.

Forty percent of respondents view workplace AI as a threat to their retirement plans. Among Generation Z respondents, 42% are extremely concerned that AI could hurt their earnings power before retirement.

Pitney said career disruptions could affect retirement savings by creating employment gaps, changes in income or periods when workers are not participating in an employer retirement plan. He said the effect of AI on employment remains uncertain because the technology could also create new jobs.

Respondents were also divided over how AI could affect healthcare costs. Twenty-seven percent said AI could increase healthcare costs because of expensive breakthrough treatments, while 22% said it could lower costs through greater efficiency, prevention and access.

Twenty percent said AI would have no significant impact on healthcare costs, while 32% said they did not know how AI would affect healthcare expenses.

The TIAA survey was conducted online by KRC Research among U.S. adults ages 18 to 65 from July 27-31, 2026. TIAA released the findings Oct. 1 during National Retirement Security Month.