Pensions  

Report: retirement income threatened by longevity

Report: retirement income threatened by longevity

Savers could be significantly underestimating how long they could live beyond the age of 65 when planning their retirement income, an Aviva report has warned.

The 20-page longevity report, Making Your Money Last in Retirement, found that many people could be underestimating their life expectancy with significant financial consequences.

It said: “The financial implications for people underestimating their life expectancy are significant.

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“Those people estimating they need £100,000 of private pension savings to top up their other income, such as state pension, could actually need about £150,00 if they had accurately predicted their life expectancy.”

Local authority/council areaMale life expectancy at age 65Female life expectancy at age 65
Harrow20.923.4
Manchester15.818.8
Kensington and Chelsea20.823.2
Glasgow City14.918.3
Blaenau Gwent16.518.7

Source: Aviva

Research carried out for the report among 1,100 people aged between 50 and 65 found that 29 per cent of men and 23 per cent of women did not think they would reach their average life expectancy.

Of those predicting a shorter life expectancy, men said they would die on average 13 years earlier, at 67, compared with women who expected to die on average 12 years earlier, at the age of 72.

When asked about their main worries, 56 per cent of respondents named ill health, 50 per cent mentioned conditions such as dementia and 36 per cent were concerned about being dependent on other people.

But only 5 per cent mentioned the prospect of living longer than they had expected and not having the money to fund their retirement.

The report added that savers should carefully consider their options, from annuities to drawdown, so as to provide an income in retirement.

The report also noted that life expectancy by local authority area could vary significantly.

Adviser view

Kevin Croker, independent financial planner for Derbyshire-based Crokers Financial Planning, said: “My clients are surprised at how long they may possibly live but if they are in good health at the age of 60, it is hopefully a good sign of a long retirement.”