New analysis reveals that men are likely to live four years longer than they expect, while women are underestimating their lifespan by a staggering seven years.
Building on BW’s At Retirement Reckoning report, which examined public perceptions of life expectancy, pension planning, and retirement readiness, the firm’s actuaries have now advanced the research by comparing these perceptions with proprietary life expectancy models refined using real-world pension scheme data and adjusted for distortions like the COVID-19 pandemic. Most individuals expect to live until around age 82 - but actuarial models based on real pension scheme data show they’re likely to live significantly longer. For men, the gap is around four years: while they expect to live to 82, the reality is closer to 86. For women, the shortfall is even more dramatic. They also expect to reach 82, but in reality, many will live until 89 - underestimating their lifespan by a full seven years.
The results are sobering: the UK is facing a serious retirement readiness gap. And this misjudgment isn't just a statistical footnote - it has major financial implications. If someone plans to draw £5,000 a year from their private pension (on top of the state pension) and assumes a 17-year retirement from age 65 to 82, they would aim to have saved around £85,000. But if they live to 86, as many men will, they’d need £105,000. For women likely to reach 89, the requirement jumps to £120,000. That’s a shortfall of £20,000 for men and £35,000 for women - assuming modest income expectations.
The situation becomes even more concerning when looking at women’s pension savings specifically. On average, women retire with significantly smaller pension pots than men. Many manage to save only around £50,000 by the time they retire. But if they end up needing £120,000 to sustain them through retirement, they face a £70,000 gap - leaving them dangerously exposed and potentially far more reliant on state support later in life. The disparity in life expectancy between men and women is a key part of the problem. Men and women tend to assume they will live for roughly the same amount of time, but women typically outlive men by around three years. With longer lives and smaller savings, women face a uniquely challenging retirement landscape.
Even those with Defined Benefit (DB) pensions - widely seen as the most generous and stable form of retirement income - are not immune. While DB scheme members tend to live longer than average, often due to socio-economic advantages, the analysis shows they too are underestimating their longevity and under-planning their financial needs. The comfort of a DB scheme may be masking a deeper issue: nobody can plan well if they don’t understand what they’re planning for.
Jack Carmichael, Associate and Senior Longevity Actuary at independent consultancy BW, says: "The gap between expectations and reality on life expectancy is yet another seismic hurdle in the way of solving the gender pensions gap. Millions of savers are heading into retirement with unrealistic expectations and inadequate savings. Women in particular are facing a perfect storm: longer lives, smaller pension pots, and a far greater risk of running out of money. We do see women often increasing contributions in later life, presumably to catch up on shortfalls. But these contributions are generally not high enough. The earlier people can plan, educate themselves on life expectancy, and increase their contributions, the better.
"For older women who are facing this issue imminently, working longer, or returning to work if possible, would help to build up more retirement income and make it last for longer. Alternatively, for those lucky enough to have both a DB and DC pension, delaying taking one or considering annuities might be sensible. If there's ever a turning point to consider financial advice, it's now; an advisor can help set your DC income based on your personal realistic life expectancy, and the shape of your retirement, allowing for a varied phased approach from 'go go' to 'slow go' to 'no go', where care needs become critical."
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