Pensions - Articles - Just Retirement comments on ONS life expectancy figures

 “The big picture is that improvements in life expectancy across the population are continuing which is good news although inevitably it has consequences for how people plan their lives and finances to cope with the extra years,” he said.

 “However, at an individual level people should be cautious about reading anything into these figures for financial planning purposes because they underestimate how long most people will live. This is very important at a time when many more retirees are choosing drawdown options rather than choosing guaranteed income for life which insures them against outliving their assets.

 “One reason for the underestimation is that the ONS figures don’t take account of future mortality improvements which have been running at the rate of around three extra years of life for every decade.

 “Life expectancy averages covered in the news have to be treated carefully because the simple (mean) average age of death is several years before the median (half die before, half after) average which itself is before the mode (most likely) age at death. The ONS puts life expectancy for a 65 year old man at 18.7 years and for a woman 21.1 years, whereas figures based on insurance company data are more like 25 years life expectancy for a 65 year old man in average health and 28 years for a woman with another three years on top of that for men and women in good health.

 “Financial planners dealing with individuals need to take into account additional factors such as wealth and health of the client when thinking about life expectancy, using a range of possible outcomes rather than fixating on a single figure.”