Life expectancy at older ages is continuing to increase, data from the Office for National Statistics have revealed, meaning pensions need to last longer.
In an analysis looking at how life expectancy in England and Wales has changed since the 19th century, the government’s official statistics body revealed that when the state pension was first introduced in 1908, pensions needed to last around nine years.
In 2011 men and women at state pension age were expected to live for approximately 20 more years. The ONS said this meant that we need to make our pensions last more than twice as long as when they were first introduced.
The life expectancy of a woman aged 65 in 1841 was 11.5 years and reached 20.9 years in 2011. For men of the same age it was 10.9 years in 1841 and 18.3 years in 2011, according to ONS life tables.
Life tables calculate the number of years a person is expected to live given that they have already reached a certain age.
A girl born in 2011 was expected to reach age 82.8. However, someone who was 60 years old already in 2011 was expected to live a further 25.2 years, until 85.
A newborn boy was expected to live to 40.2 in 1841, compared to 79.0 in 2011, whereas a baby girl was expected to live to 42.2 in 1841 and 82.8 in 2011.
Addy Frederick, media relations manager for life and pension provider LV=, said: “The news that people are living longer is welcome and highlights the importance of financial planning. When it comes to protection, sales of life cover outstrip those of income protection, yet someone is more likely to be off work for more than two months than suffer a serious illness and die before they retire.
“With more and more people working beyond state retirement age, it is important that they have the relevant protection in place to meet their needs. It is also worth savers thinking about the length of time they may spend in retirement to ensure that they are saving enough to fund a comfortable lifestyle once they leave the workplace.”
Darren Cooke, financial planner at Derbyshire-based Red Circle Financial Planning, said: “In terms of financial planning, retirement income planning is now more important than it has ever been.
“Good advice is crucial for people hoping to attain their required lifestyle in retirement. So it is about financial planning and using cash flow modelling tools to help them understand their likely income and expenditure in retirement.”