Racial and Ethnic Differences in Longevity Perceptions and Implications for Financial Decision-Making
Inaccurate perceptions regarding life expectancy can lead to suboptimal financial decisions with long-term consequences, including undersaving prior to retirement, and overspending during retirement. As prior research suggests that Covid-19 mortality has disproportionately harmed those with low incomes, African Americans, and Hispanics in the United States, we seek to determine whether subjective survival perceptions among these groups changed in a manner consistent with observed outcomes. We fielded two online experimental surveys of US residents: one took place early in the pandemic outbreak, and the second, a year later. Using vignettes, we examine whether minorities’ perceptions regarding longevity at the outbreak were consistent with observed reality, and how these compared to members of the white majority population. Furthermore, the panel aspect of our study enables us to test whether and how these perceptions updated over time during the pandemic. Finally, we show how these perceptions related to advice regarding retirement saving and drawdowns.