There are plenty of people who spend a lifetime playing down their bad habits. It becomes almost second nature to round down their weight, conveniently forget the odd cigarette, or try not to make a fuss over their blood pressure when talking to authority figures (like insurers or doctors).
However, in your retirement, this could cost you a shocking 23% of your income.
LiesResearch from MGM Advantage found that one in twenty retired people underestimated the extent of health or lifestyle factors when talking to their pension company about their retirement income.
Some deliberately under-estimated smoking and drinking, others did not declare one or more medical conditions and some said bluntly that they were not at all honest with their provider.
When you're applying for other financial products in life and are asked about your health, you might stand to gain from a white lie that paints you in a better light - until you are found out. But while it may have secured lower life insurance or health insurance premiums, when it comes to retirement income you're doing yourself a major disservice.
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Bad habits pay offIf you have a defined contribution pension (like a personal pension or a money purchase pension) when you come to retire you'll have a pot of money. The vast majority of people buy an annuity with it to turn it into a monthly income. It's when you buy this annuity that you'll be asked about your health.
You're actually being asked about it because the company is trying to work out how long you are going to live for. So, for example, if you drink and smoke, they'll assume you'll die younger, so they'll be paying you for fewer years, and they can afford to pay you more each month. A smoker or drinker could be paid 10% more each month than someone with better habits.
On average the income from the enhanced annuities available to those with lifestyle or health factors is 23% higher than a standard annuity. And MGM estimates that 70% of people could qualify for an enhanced annuity.
Tully says: "This is why it is vital people approaching retirement and considering their options are honest about any health or lifestyle condition they may have. This could have a significant and positive effect on the income they could receive from an annuity"
Shop aroundThey say it's also vital to look at all of your options at retirement, rather than simply the annuity on offer from your pension provider. You need to decide whether you want an investment-linked annuity, an inflation-proof annuity, a joint or single-life annuity. You can also consider taking your income in phases, to give yourself more flexibility, and weigh up whether your health or lifestyle qualifies you for an enhanced annuity.
Whatever you finally decide - with or without advice - you should always search the market for the best annuity, or you'll be paying for it for the rest of your life.