Savers should plan to live to 100 to make sure their pension pots are big enough, advisers have warned, as research showed they would need £426,000 to fund such a lengthy retirement.
The number of people expected to live to 100 is expected to increase in the next 35 years to 100,000 and advisers have said savers should start planning their finances earlier.
Investment provider EasyMoney has estimated people who live to the age of 100 will need savings of up to £426,000 to fund a "tolerable" retirement.
It found those living to 82, which is currently a normal life expectancy, will need to save £228,000 for their retirement.
Tamsin Caine, head of financial planning at Smart Financial, said her firm plans for all clients to live up to the age of 100.
She said: "We plan for all our clients to live to up to age 100, this is because there are now more people living to that age.
"If you only plan financially for the average life expectancy age, then clients may well end up with less money. You can’t say what is the average amount that people should save because everyone’s lifestyle is different, with more people living to such an old age it’s even more important to have tailored financial advice."
Ms Caine said workplace pensions would not be enough to fund people’s retirement to age 100.
She said: "We’ve already seen that people are not saving enough into their workplace pensions and if they are living to a very old age then the only answer is for them to save more. Investments tend to perform better than pensions, in terms of growth, but not everyone will consider those as an option."
There has been long-running concern about the fact contribution rates into auto-enrolment pension schemes are not high enough to produce sufficient retirement income, with former pensions minister Baroness Altmann admitting they were "inadequate" while she was in office.
In April minimum pension contributions increased from 2 per cent to 5 per cent, with the worker now paying 3 per cent, and in 2019 they will increase again to 8 per cent, with the employee paying 5 per cent.
David Hearne, director and wealth management adviser at Satis Asset Management, said people should start investing earlier in their lives, when they are able to take more risk, and consider a later retirement.
"Unless you want to start working again at age 82, your finances should be prepared for you living to 100," said Mr Hearne.
"In terms of saving the amount required, it requires a combination of factors, the first is the realisation that our houses might not be our biggest assets and financial commitments, we may need to think bigger for our retirement plans.
"Starting early should also enable you to take more risk and consider equity rather than fixed interest investments, perhaps most importantly is realising that retirement my no longer be something that happens on a single day in your 60s.
"If you can postpone drawing on your retirement assets, perhaps by working part time, your retirement savings can hopefully continue growing, and be needed for fewer years."
rosie.quigley@ft.com
