A retirement savings gap is looming as people underestimate their life expectancy, new research from Canada Life has shown.
According to the findings, men and women aged 50 and over think they will live until around age 80. However, figures from the Office for National Statistics suggest a male aged 50 will live on average to age 84, while a woman aged 50 will live on average to age 87.
Canada Life warned that this gap in expectation and reality risks creating additional pressures on retirement planning, particularly with most people choosing unsecure retirement income over any type of guarantee.
Nick Flynn, retirement income director at Canada Life, said: “Longevity risk is the one known unknown in retirement planning but if people are underestimating their life expectancy, this opens up a new retirement gap.
“Talking about and thinking about your own mortality at the best of times is difficult but not having these conversations will leave you open to falling short when it comes to your retirement income. Annuities are the only 100% bet against outliving your pension and with the significant improvements in rates witnessed over the past 18 months, deserve more than a secondary glance.”
Separate research from investment comparison site Investing Reviews found that the majority of Britons also believe the UK retirement age should be lowered. More than three quarters (78%) of people believe the retirement age in the UK should be lowered, however 70% admit it’s harder to retire comfortably in the UK today than ever before. More than three fifths (62%) do not believe that their pension is enough to retire comfortably and 55% agree that they are unable to make as many pension contributions as they would like to.
However, 34% also admitted they do not know exactly how much money is in their pension.
Simon Jones, CEO of Investing Reviews, commented: “There are endless debates to be had regarding the UK retirement age and the state of pensions, especially considering the recent rise in retirement age in France and the backlash that received. These responses offer a fascinating insight into the attitudes that the British public hold towards pensions and retirement ages, particularly the sentiment that it is now harder to retire comfortably than ever before. It will be interesting to see if the increasing difficulty of the cost-of-living crisis has any effect on these sentiments in the future.”
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