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Over 50s may be caught short in retirement as they underestimate life expectancy

Over 50s may be caught short in retirement as they underestimate life expectancy

 

  • Over 50s are underestimating how long they are likely to live by up to six years
  • ONS data reveals that the current life expectancy of 50 years olds is between 86 and 892

Over 50s are significantly underestimating their life expectancy, according to new research from Canada Life. The firm is warning that this could leave many retirees struggling with financial needs in retirement as their pension pots become overstretched.

The findings are published in the firm’s latest Retirement Sentiment Index, which tracks trends in how those approaching retirement think about their finances. When asked what age they expect to live to, the average answer from over 50s was 82 years old. Men estimated a lower life expectancy than women (81.2 years compared to 83 years).

Official data from ONS shows that 50 year olds are currently expected to live until 86 if they are a man, and 89 if they are a woman. This means that men are typically underestimating their life expectancy by almost five years, and women by six.

Andrew Tully, Pensions Technical Director at Canada Life, comments: ‘While it is clearly positive that people will live longer on average than they think, it could have a significant impact on their finances. Our data shows that the over 50s consistently underestimate their life expectancy despite the constant news stories about improving longevity and availability of online resources to help people plan for retirement.

‘However it is important to remember averages are just that. We are all different and averages mask significant differences in life expectancy across the UK. Which is why it is key to seek proper financial advice when planning for the future. An adviser will help design a plan for your personal retirement journey which considers all the risks, be that investment risk, or the risk of outliving your savings.’

Canada Life’s research also reveals stark differences in predicted life expectancy depending on where over 50s live. Londoners expected to live the longest with an average of 83.6 years old, while the lowest, in Wales, was four years less at an average of 79.5.

Andrew Tully adds: ‘Reports that the rate of improvement in life expectancy has slowed may explain why many over 50s are underestimating how long they will live. But given the likelihood that most will survive long after their 80th birthday, they should ensure that the health of their finances is worthy of the celebrations.’

 

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  1. Source: The data in this release from Canada Life’s annual Retirement Sentiment Index and is based on Censuswide polling conducted online between 06/03/2018 and 09/03/2018, surveying 1,003 UK adults aged 50 and over who are not retired and have a defined contribution or individual pension in place.

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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 (Ireland) DAC is authorised and regulated by the Central Bank of Ireland.

Stonehaven UK Limited and MGM Advantage Life Limited, trading as Canada Life, are subsidiaries of The Canada Life Group (U.K.) Limited. Stonehaven UK Ltd is authorised and regulated by the Financial Conduct Authority. MGM Advantage Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority.