Political parties need to make clear their plans for the state pension, triple lock and social care funding ahead of the General Election, says Aegon, as the latest data reveals more people are living to 100 than ever before.
According to the Office for National Statistics, there were 15,120 centenarians in 2022, an increase of 3.7% since the year before and double the number in 2002.
While the number of women centenarians continues to far exceed the number of men reaching 100, the ‘sex ratio’ has dropped from 8.2 women for every man over 100 in 2002 to 4.5 women to every man over 100 in 2022, meaning reaching 100 is a very real prospect for both men and women.
Steven Cameron, pensions director at Aegon, said: “While living longer is a cause for celebration, it also throws a monumental question at us: are we truly equipped, both financially and mentally, to navigate a much longer life than expected by previous generations? And as we head towards a general election, will whichever party forms the next Government play its part in offering support, clarity and fairness in the age of increasing longevity?”
Aegon has explored the new opportunities and challenges for those over the age of 50 in its ‘Second 50’ report, which showed that those in their 50s can expect a “radically different life” to previous generations. Life after 50 is more likely to be ‘multi-staged’ than follow the traditional convention of education, work and retirement, Aegon said, and advisers will need to consider that those entering their ‘second 50’ today will have vastly different prospects to the generations before them.
But while individuals will have many new opportunities in the second half of their life, there are also challenges, says Cameron, and political parties must offer greater clarity.
“We are urging all political parties to make clear ahead of the General Election their plans for the state pension and its triple lock as well as on social care funding. This is important not just for those in later life but for all voters, with key questions around how to offer support within a framework of intergenerational fairness,” said Cameron.
People will also need to give much greater thought to their pensions, which will potentially need to sustain them for decades in retirement.
An independent survey by AJ Bell found savers aged 55 to 59 who had entered ‘drawdown’ on average thought they would live for 21 more years.
Tom Selby, director of public policy at AJ Bell, said: “Many people will live well beyond the average. If long-term life expectancy improvements continue, younger generations will become increasingly likely to reach three figures. It is therefore crucial to save as much as you can afford, as early as possible, making the most of employer contributions and the bonus of pension tax relief.”
To save £625,000, a 25 year old would need to put away around £4,200 a year in total, or £350 a month. Starting at age 35 sees the savings target almost double to £7,500 a year, or £625 per month, and as much as £14,500 for those aged 45.
Individuals will also need to think about the investment risk they want to take and those choosing drawdown, will need to ensure that they engage with their fund and withdraw their money sustainably.
