Retirement planning must evolve to reflect growing numbers of people living to age 90, say pensions experts.
New figures from the Office for National Statistics show that there were 611,719 people aged 90 years and over in the UK in 2023. It marks an increase of 0.3% from 2022, although below the 2% increase recorded between 2021 and 2022.
The ONS said there were an estimated 16,140 centenarians in the UK in 2023, more than double the number of centenarians in 2003. Much of the recent rapid growth in the number of centenarians is because the large cohort born after World War I turned 100 years old between 2020 and 2021.
Meanwhile, life expectancy at birth in the UK in 2021 to 2021 was 78.8 years for boys and 82.8 years for girls. Life expectancy at age 65 years was 18.5 years for men and 21 years for women.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “The great news is that many of us can look forward to living a long life. However, it does point to the challenges that people and governments face in making sure they have enough money to see them through retirement.
“The Government continues to grapple with how best to manage the burgeoning state pension bill. We’ve seen the Government increase state pension age in a bid to mitigate costs but there’s only so far this can go. We may be living until a ripe old age, but with healthy life expectancy hovering in the early 60s, the reality is that many people will not be able to continue to keep working. They may face a gap of several years between leaving work and reaching state pension age that needs to be filled.”
Morrissey described rumours of changes to state pension, such as means testing, as ‘unsettling’ for people, making it difficult to plan.
“The state pension forms the backbone of many people’s retirement income and they need certainty as to what they are going to get from the state and when. The state pension should form part of the ongoing Pension Review so this longer-term certainty can be delivered,” she said.
The data also highlights the importance of people making their own pension provision, ensuring they boost auto-enrolment contributions where possible and making the most of any extra contributions employers are willing to make, added Morrissey.
Mike Ambery, retirement savings director at Standard Life, agrees that retirement planning must evolve to reflect the reality that someone could need their savings to last 25 years or longer. According to Standard Life’s own research, 66% of people aged 50 and over do not have a plan in place for managing their retirement income, leaving them vulnerable to financial uncertainty later in life.
“People need to think carefully about their essential expenses, such as housing, utility bills and care costs. It’s also important to consider how these costs will be covered, whether through the state pension or an annuity.
“A structured approach, starting with securing core expenses and then considering how best to manage and potentially grow remaining savings can help people build long-term financial confidence and protect against the risk of outliving their income,” he said.
Main image: dan-cristian-padure-Al7oCLVJB8g-unsplash
