Executive Summary

Seven years ago, we conducted our first seminal study on financial literacy. This latest update focusses on pension and longevity.

In an aging world, longevity literacy is essential. The number of people aged 65 years or older is expected to double from 806mn in 2023 to 1.6bn in 2050 because of the demographic transition to longer lives and smaller families. Longevity literacy refers to understanding the economic and personal implications of an increased lifespan after retirement. Retirement planning is key as income security post-retirement will directly depend on the savings accumulated during the work life and the public finances of the country in which the person has retired. Failing to plan is planning to fail – both individually and by policymakers.

Yet, our survey shows that only 24% of people can be considered longevity literate, ranging from 31% in France and 29% in China to just 18% in the US. In the last quarter of 2023, we surveyed 1,000 people in six countries to assess their level of longevity literacy and how it might affect their retirement planning. In Germany, 26% of the sample was longevity literate, while in the UK this figure was 21% and in Italy 19%. Interestingly, pinpointing the current retirement age was often a challenge, despite heavy media coverage of the topic in some countries. In France, for example, 79% of our sample overestimated the retirement age and only 14% could state the exact age.  

There is a remarkable gap between the desired and statutory retirement age, in particular among younger generations. In the US and UK, Gen-Z respondents want to retire on average 12 years before the actual statutory retirement age; in France and Germany, the gap is “only” 7 years. On the other hand, most respondents get the estimates of life expectancy right – if the official statistics, based on period life tables, are believed to be correct. But most certainly, they are not as they ignore future progress in medicine, not least in slowing down the aging process. Past experience suggests that the difference between expected life spans at birth and realized life spans at death might be at least eight years.

There is also a striking gender gap when it comes to longevity literacy. With the exception of France, male respondents were more likely to be longevity literate than female respondents; the average gap is 7pp. In China, the gap amounts to whopping 30pp as female respondents were less aware of the retirement age and the longer life expectancy of women compared to men in their country. This gender gap in longevity literacy is particularly worrying since old-age poverty in developed economies is overwhelmingly driven by higher poverty rates among elderly women.  

Achieving a successful pension system involves public-private partnerships to establish a trustworthy and efficient retirement savings and decumulation framework. Further pension reforms should prioritize participants' needs during both their working and retired phases of life. Finding the right balance between contribution and wage replacement rates in retirement is essential. Individualization is needed and possible through personal savings plans and insurance.

Arne Holzhausen

Allianz SE

Patricia Pelayo-Romero

Allianz SE

Michaela Grimm

Allianz SE

Lorenzo Stucchi  

Allianz SE