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New retirement gap looms as people underestimate life expectancy

According to new research1 from Canada Life, people aged 50 and over on average think they will live until around age 80, whether male or female.  The good news is, according to the ONS life expectancy calculator2, a male aged 50, will, on average live to age 84, while a women aged 50 will live on average to age 87.

This gap in expectation and reality creates additional pressures on retirement planning and a different type of retirement gap, according to Canada Life, especially given the choices the majority of people currently make around their plans, choosing unsecure retirement income over any type of guarantee.

Nick Flynn, retirement income director at Canada Life explains:

“Longevity risk is the one known unknown in retirement planning, but if people are underestimating their life expectancy, this opens up a new retirement gap.

“Men and women thought they would live to age 80, despite the stats showing on average men will live for a further four years and women a further seven years. One in four women aged 50 today can expect to enjoy retirement into their 90s, living till age 95.

“Talking about and thinking about your own mortality at the best of times is difficult, but not having these conversations will leave you open to falling short when it comes to your retirement income. Annuities are the only 100% bet against outliving your pension, and with the significant improvement in rates witnessed over the past 18-months, deserve more than a secondary glance.

“A professional financial adviser is best equipped to talk you through the various options, to ensure your plans remain on track throughout the course of your retirement journey.”

How lifetime annuity rates have changed over time

Source: Canada Life annuity rates over time, as at 01/06/20233

ENDS

Enquiries:

Press enquiries should be directed to:

Elle McAtamney at Canada Life, elle.mcatamney@canadalife.co.uk

Notes to editors:

  1. Source: Research among 2,000 UK adults, of which a representative sample of 955 were aged 50 and over, fieldwork conducted by Opinium between 28th April 2023 and 2nd May 2023.
  2. Source: https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07
  3. Canada Life benchmark annuity rates over time, £100,000 purchase price, 10-year guarantee, no health or lifestyle factors. 15-year gilt yields sourced from ft.com.

About Canada Life:

Canada Life is part of a group of companies controlled by Great-West Lifeco Inc., a diversified financial services holding company headquartered in Winnipeg, Canada. Through its subsidiary companies, Lifeco has operations in Canada, the United States, and Europe. Great-West Lifeco and its insurance subsidiaries have received strong ratings from major rating agencies.  Great-West Lifeco has over 38 million customers worldwide and £1.532trillion assets under administration (as at 31 December 2022).

Canada Life Limited began operations in the United Kingdom in 1903 and looks after the retirement, investment and protection needs of individuals and companies alike. As well as providing stability and security through its individual contracts, Canada Life Limited has grown to become the leading provider of competitively priced group insurance solutions. Canada Life acquired Retirement Advantage on 3rd January 2018 for an undisclosed sum. The acquisition added over 30,000 retirement income and equity release customers and more than £2 billion of assets under management including a £1.5 billion block of in-force annuities to Canada Life.

Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority. Canada Life International Assurance Limited and Canada Life International Assurance (Ireland) DAC are authorised and regulated by the Central Bank of Ireland.

www.canadalife.co.uk