Life expectancies bear no relationship to how long an individual retiree may live - making it extremely dangerous for people manage to manage their savings over that period.
The Pensions Minister, Steve Webb, has today said that people should be issued guidance on how long they are likely to live in order to aid their financial planning.
Specialist insurer, Partnership wholeheartedly agree with the concept that individuals would benefit enormously from being provided with up-to-date information on how long they are likely to live.
Numerous studies have shown that people tend to significantly underestimate their likely lifespan on retirement.
Richard Willets, Director of Longevity at specialist insurer, Partnership said “It is important that the information provided properly reflects the pace at which lifespans have been rising and are likely to rise in the future. Figures should also take into account the variance in likely life expectancy depending on individual factors such as lifestyle and health.”
“However, it is vital to understand that life expectancy is just an average figure. At the end of the day, it is still impossible to say with complete certainty whether an individual will die tomorrow or live to receive a telegram from the Queen. It is even more important, therefore, that people can access clear information showing them how likely they are to survive to different ages.”
“Recent figures* produced by the ONS suggest that the average life expectancy in the UK for a 65-year-old is now 86.5 years for a man and 89.2 years for a woman. However, around 40% of men and 50% of women are likely to live into their 90s and more than 1 in 10 are likely to celebrate their 100th birthday. (See table below)
Someone who chooses to manage their own retirement fund based on their own longevity calculation is taking a huge risk that they will run out of money in later life. An annuity provides a guaranteed income that guards against someone living longer than expected.”
Projected proportion of people surviving to different ages, currently aged 65 in the UK
Age % of men surviving to age % of women surviving to age
90 39% 51%
95 22% 31%
100 8% 14%
Source: own calculations based on ONS 2012-based projection
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