Protecting and planning for greater longevity
4 November 2019
People are underestimating how long they may live, leaving them financially unprepared for their retirement years, new research from Scottish Widows has shown.
One in five people (19%) currently base their own life expectancy on the age to which their grandparents lived, despite lifespans increasing by as much as 11 years across three generations.
Today’s average life expectancy is 87 years, yet the average adult expects to live to just 82 and retire at 65. Those five additional years will require an extra £80,000 in pension savings, meaning people would need to put aside £340,000 during their working life, according to the pensions giant.
Despite the shortfall, one in 10 over-50s is unsure how they will fund their income and over a quarter (28%) fear running out of money in retirement.
Scottish Widows said a lack understanding around life expectancy is putting people’s retirement plans “at risk”. Just 9% of over-50s who are not retired and do not have a defined benefit pension, are planning to buy a product providing a secure income for life.
Emma Watkins, annuities director, Scottish Widows, said: “Life expectancy has grown substantially in the last 60 years and now one in 10 people will live to be 100. As the concept of the three-stage life is becoming out of date, people facing into retirement are also facing a trade-off between saving more, working longer or having a clearer plan.
“Pension Freedoms opened the door to new opportunities and flexibility for savers, but advice on the best way to put in place a stable, predictable income for life would give some comfort to those facing a retirement that could last more than 20 years.”
Scottish Widows’ research found that when faced with the reality they will live longer than they think, 12% of people over 50 expect to work longer, 15% say they’ll have to budget their retirement savings better, and 9% say they’ll need to put more aside than they originally thought.
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