"Subjective Expectations of Survival" Survey

• Survival pessimism may mean that individuals save less during working life, and spend more in the earlier years of retirement, than they would, given their actual survival chances.

• The risk of this faster-than-optimal spending down of wealth, combined with optimism about survival at the very oldest ages, means that if individuals survive through their 80s and into their 90s, they may not only have relatively low levels of wealth, but may then be reluctant to spend this, with negative consequences for their living standards.
  

Cormac O'Dea and David Sturrock, Institute for Fiscal Studies, ELSA Survey

This recent survey and its conclusions from Britain's Institute for Fiscal Studies, which focuses on economics, set out to study how the elderly prepare for their retirement years, setting aside finances and depending on state-provided subsidies for the elderly retired, by seeking to judge how it is that individuals as they age contemplate how long they may live, and with that figure in their heads, then calculate what they will need in financial support to enable them to live with a semblance of comfort and grace until they reach their expiration date.

What the study authors -- Cormac O'Dea and David Sturrock -- used for the data they acquired was an unimpeachable source; the statistics gathered by the U.K.'s Office for National Statistics, picking through its long-term surveys to assess "subjective expectations of survival" linked to economic plans for a feasible lifestyle in old age. Since people do realistically have to plan to ensure whatever funding they do have will take them through to that time when they no longer need it, the topic is fairly universal.

Individuals from age fifty upward in the English Longitudinal Study of Aging (ELSA), with its base of some 16,000 respondents were queried and asked to respond by estimating what they felt to be their personal chances of surviving to set ages. An age marker held to be between 11 and 15 years ahead of their current age saw younger respondents doubtful about chances of living to age 85. Following on the initial questionnaire repeats were taken biennially.

Information relating to personal medical and family history, along with socioeconomic background all constituted part of the survey questions. To which people surveyed appeared to respond with individual biases, so that for example people whose parents failed to live to a ripe old age were less optimistic that they themselves could aspire to do so. Those who smoked gave themselves between six to eight years of diminished longevity. With repeated surveys the opportunity arose for 'corrections'; should a diagnosis of adverse health have intervened, life expectancy figures went downward.

Very realistic self-diagnoses, in other words. On the other hand this study verified what others before it discovered; that a general pattern exists in people's estimates of their own mortality. So that when in their 50s and 60s when the initial intimations of gradually failing sight, hearing, physical endurance and strength begin to emerge, doubts creep in, along with a tendency to underestimate chances of acquiring the benefits of advanced age.

As example, for 65-year-old men born in the 1940s, the collective belief becomes that a mere two-thirds will reach age 75, whereas national life tables give the real figure for that generation as 83 percent -- and women tend to render a similar collective response, even though women live longer with the real-world survival rate for that generation being 89 percent.

This is termed "survival pessimism", common to people under age 70. Then again, as people grow into their 80s the opposite occurs with a significant overestimation as to how long they will then expect to live. The key to the group's interest in the study results resided in the economic element; just how well financial planning decisions are being made, to match longevity expectations.

• Relative to life tables, individuals from a range of ages and birth cohorts underestimate their chances of survival to ages 75, 80 and 85, on average. Those in their 50s and 60s underestimate their chances of survival to age 75 by around 20 percentage points and to 85 by around 5 to 10 percentage For example, men born in the 1940s who were interviewed at age 65 reported a 65% chance of making it to age 75, whereas the official estimate was 83%. For women, the equivalent figures were 65% and 89%.

• Individuals in their late 70s and 80s are, on average, optimistic about surviving to ages 90, 95 and above. This optimism becomes larger at older ages (10–15 percentage points when looking at age 95) and is larger for men than for women, amongst those born in the 1920s and 1930 For example, men born in the 1930s who were interviewed at age 80 reported a 32% chance of making it to age 95, whereas the official estimate was 17%. For women, the equivalent figures were 37% and 24%.

Cormac O'Dea and David Sturrock, Institute for Fiscal Studies