“The figures from the ONS are a testament to human ingenuity and longevity, with 57.7% rise in the numbers of people living into their 90s, from 2002 to 2023 in the UK. While longer lifespans bring great opportunities, there are also challenges, with 300 months between your 65th and 90th birthday, highlighting the scale of the financial challenge facing those who need to make their money last over multiple decades.
“Retirement planning must evolve to reflect the reality that someone could need their savings to last 25 years or longer. However, our research shows that two-thirds (66%) of people aged 50-and-over do not have a plan in place for managing their retirement income, leaving them vulnerable to financial uncertainty later in life particularly as many people under-estimate their potential longevity.
“People need to think carefully about their essential expenses, such as housing, utility bills and medical and care costs. It’s also important to consider how these costs will be covered, whether through the state pension or an annuity, especially with average annuity rates up around 8% in twelve months. A structured approach, starting with securing core expenses and then considering how best to manage and potentially grow remaining savings, can help people build long-term financial confidence and protect against the risk of outliving their income. By taking action early and making informed decisions, individuals can create a stable and secure financial future, no matter how long their retirement lasts.”
Phoenix Group’s Catherine Foot, Director of Phoenix Insights, added: “As a society, we’re living with one of the largest generations of older people in our history, which is likely to be the case for the foreseeable future. This is a marvel of modern life, but one that comes with its own challenges.
“Too many people simply do not have the savings to live comfortably in retirement for such a length of time. This looks set to worsen over the next decades - between 2025 and 2060, over half of retirees with a DC pension are projected to be under-saving, indicating a looming retirement crisis.
“We need urgent measures to address under-saving and help future generations become financially secure in later life, particularly as questions continue around the sustainability of the State Pension in its current form. These should include a plan to increase minimum auto-enrolment contribution rates, as well as policies to help people stay in work as long as they want to, allowing them to continue to earn and save more across longer lives.”
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