Insurance customers are often cautioned not to underestimate how much health coverage they'll need once they retire, as medical expenses can be considerable. But another reason is that people are living a lot longer than they used to.
According to a new report from the Society of Actuaries, more than half of retirees and pre-retirees underestimate the age they expect to reach before passing away. In fact, as many as four in every 10 are off by five or more years.
Retirement expert Cindy Levering said this often poses financial problems for those who are about to leave their jobs for good.
"Underestimation of life expectancy, combined with having too short of a planning horizon can result in inadequate funds for retirement needs," said Levering. "There is a general misunderstanding of what 'average life expectancy' means, and when people are told they will live to an age such as 80 or 85, they don't realize that this means there is a 50 percent chance that they could live past that age."
In addition to health coverage, life insurance is another product for insurance agents to recommend to clients, as this can supplement their cost of living in retirement.