Yes, it’s important to take your life expectancy into account when planning for your future and working out just how long you’ll need your savings to last, but new research has suggested that relying solely on data from the Office for National Statistics (ONS) could result in retirement ruin.
ONS stats show that for 65-year-olds at the moment, the average life expectancy for a man is 83 and for a woman 86. But those entering their retirement right now should expect to live seven years longer if a man and six years longer if a woman. This means that a 65-year-old man retiring with £250,000 would need to save an extra £66,000 in order to maintain income levels for this additional timescale.
This is according to the latest study from asset management company Aegon, revealing in fact that women in the UK have a one in three chance of reaching 95 years old… so it’s highly likely that people could actually outlive their financial plans.
“Advisers don’t have a crystal ball any more than retirees do themselves, but average life expectancy statistics should only ever be a starting point. Improving mortality over time could push up the average by half a decade, and people also need to factor in variations based on health, genetics and lifestyle. The upshot is that people should prepare financially to live significantly longer,” pensions director at Aegon Steven Cameron said.
Further research from the company has also found that one in seven of those aged between 55 and 65 are approaching their retirement without a private or workplace pension in place – which means 1.2 million people are looking to retire with nothing to add to their state pension.
I want to unlock my pension… find out how right here.