Perceptions of Mortality: Individual Assessments of Longevity Risk

39 Pages Posted: 26 Jun 2020

See all articles by Kathleen M. McGarry

Kathleen M. McGarry

University of California, Los Angeles (UCLA) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: June 18, 2020

Abstract

Financially successful retirement depends in large part on managing longevity risk: individuals need to save during their working lives to cover expenses in retirement, and then they must spend down those savings carefully so as not to outlive their assets. Despite the centrality of individuals’ expectations regarding life expectancy, little is known about how longevity expectations are formed and how they evolve as individuals age. This paper assesses the evolution of subjective survival probabilities, defined as the probabilities that people believe they will live to at least 75 or 85 years of age. I examine the correlates of these reported probabilities when initially measured, how they change over time, and in particular, how they change with major life course events like the death of a parent, in-law, spouse, or sibling. I also examine how the subjective probabilities change in response to health shocks such as a heart attack or diagnosis of diabetes.

Keywords: Life expectancy, subjective survival, mortality probabilities, longevity, health

Suggested Citation

McGarry, Kathleen M., Perceptions of Mortality: Individual Assessments of Longevity Risk (June 18, 2020). Wharton Pension Research Council Working Paper No. 2020-09, Available at SSRN: https://ssrn.com/abstract=3630632 or http://dx.doi.org/10.2139/ssrn.3630632

Kathleen M. McGarry (Contact Author)

University of California, Los Angeles (UCLA) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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