The number of centenarians has more than doubled over the past two decades, highlighting the urgent need for financial planning in later life, retirement specialists have warned.
The latest data from the Office for National Statistics estimates that there were 14,850 centenarians in England and Wales in 2023; more than double the number of centenarians in 2002. The centenarian population has risen significantly since the millennium as a result of the large birth rate post-First World War.
The ONS figures also revealed a significant difference in the number of female and male centenarians, with over four times more female centenarians (12,130) than male (2,720).
While the gap is closing, there were still twice as many females than males aged 90 years and over in 2023, although this figure has reduced from more than three times the number of females than males in 2002.
Stephen Lowe, group communications director at Just Group, said: “There is a clear and significant disproportion in female and male centenarians, highlighting some of the particular challenges that women are likely to face in later-life. The combined factors of longer life expectancy and smaller personal savings mean that women are more vulnerable to poverty in later life.
“Financial planning either for an individual or as a couple can help everyone gain a clear understanding of how their preparations for later life are shaping up, so they’re able to relax and enjoy a better late life when it comes.”
Clare Stinton, head of workplace saving analysis at Hargreaves Lansdown, said people will not only need to consider how they build their pension but how they access that income.
According to Hargreaves Lansdown’s Savings and Resilience Barometer, only 38% of households are on track for a moderate retirement. Separately, recent FCA Retirement Income Market data showed over 225,000 income drawdown pots had a withdrawal rate of over 8% in a year.
Stinton said: “While you may need to make larger withdrawals for ad-hoc reasons such as home renovations or a holiday, taking too much out over a long time period will run down your pension and leave you short of money. Someone withdrawing 8% per year from a £200,000 pension could see their pot exhausted by their mid-80s.
“You also need to consider the impact of inflation over a long time period; prices will rise and your income needs to rise with it if you are to maintain your standard of living. However, the same FCA data shows over 80% of annuities purchased are level, which means that their income won’t rise with inflation and their spending power will dramatically decrease over the term of their retirement.”
Stinton said longer life expectancy will prove food for thought for the Labour government as it embarks on a review of the UK pension system.
“The issue of pension adequacy will be a major issue, alongside ensuring the pension system delivers the long-term certainty people need to save for retirement with confidence,” she added.
Main image: luis-morera-QgGAy0Ubsq4-unsplash
