People living five years longer than they envisaged could end up with an £80,000 shortfall in retirement
Brits underestimating how long they might live could end up in poverty when they retire, new research reveals.
People are living five years longer than they think they might and could end up facing an £80,000 short-fall in retirement savings, according to pension provider Scottish Widows.
The average life expectancy of UK adults saving for retirement is 87 years, yet the average adult expects to live until 82 and retire at 65.
This means a typical retirement is 22 years longer than most people expect.
Those five additional years will require an extra £80,000 in pension savings – meaning they’d have to have put aside £340,000 during their working life, Scottish Widows says.
Despite this shortfall, one in 10 people over 50 does not know how they will fund their income and 28% fear running out of money in retirement.
| Region | Age expect to live to |
|---|---|
| North East | 80 |
| North West | 80 |
| Yorkshire and the Humber | 80 |
| East Midlands | 82 |
| West Midlands | 84 |
| East of England | 84 |
| London | 83 |
| South East | 85 |
| South West | 82 |
| England (NET) | 82 |
| Wales | 85 |
| Scotland | 80 |
Source: Scottish Widows 2019
Scottish Widows warns these out-of-date assumptions about life expectancy are putting people’s retirement plans at risk.
It says people face a choice between saving more, working longer or budgeting better.
Among over-50s who are not retired and do not have a defined benefit pension, only 9% plan to buy a product that provides a secure income for life, such as an annuity.
Emma Watkins, annuities director at Scottish Widows, says: “Life expectancy has grown substantially in the last 60 years and now one in 10 people will live to be 100.
"As the concept of the three-stage life is becoming out of date, people facing into retirement are also facing a trade-off between saving more, working longer or having a clearer plan.
“Pension freedoms opened the door to new opportunities and flexibility for savers, but advice on the best way to put in place a stable, predictable income for life would give some comfort to those facing a retirement that could last more than 20 years.”
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