How long do you expect to live in retirement? How long will your cash last? And what will you do if you out-live your money? The experts have warned that there's a real danger that millions of us will do exactly that - as we drastically under-estimate how long we're likely to stick around.
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The problem is that when we look at life expectancy, we look at all the wrong things. Sometimes we consider how long our grandparents lived, or even our parents. However, that overlooks the enormous improvements in life expectancy since.
Even if we look at current life expectancy figures from the Office for National Statistics, they are misleading. They predict that a 65-year old will live to be 83 if they're male and 86 if they're female.
However, this overlooks the improvements in life expectancy we are likely to see between now and the date you reach your mid-80s (known as continuous mortality improvement). Figures from Aegon show that men entering retirement today can actually expect to live seven years longer than this (to the age of 90) - and women six years (to 92).
Running out of cash
The problem is that many of us have been left to our own devices to work out what we need to save for retirement. Pension freedoms mean we don't have to buy an annuity in order to secure an income for life, so many millions of us will calculate roughly what we want to spend each year, roughly how long we're going to live, and then multiply one by the other to reach our savings goal
Unfortunately, if we've used faulty estimates of our life expectancy, we may run out of cash before we run out of retirement. So, for example, a 65-year-old man, who calculated he needed £250,000 to get him to the age of 83 would actually need another £66,000 to maintain the same lifestyle to the age of 90.
What should you do?
Even more frustratingly, we can't really rely on this continuous mortality improvement data either, because Aegon and EValue's analysis shows that many people are likely to live even longer. Women in the UK have a one in three chance of living to age to 95 and for men there is a one in four chance.
Steven Cameron, Pensions Director at Aegon, said: "Advisers don't have a crystal ball any more than retirees do themselves, but average life expectancy statistics should only ever be a starting point. Improving mortality over time could push up the average by half a decade, and people also need to factor in variations based on health, genetics and lifestyle. The upshot is that people should prepare financially to live significantly longer."
It means that we need enough flexibility in our retirement planning to take account of the fact we cannot guarantee exactly how long we're going to live. It's worth considering, for example, buying an annuity with at least part of your pension pot, so that even if we live longer than expected, we can cover the cost of the essentials.
It also makes sense to speak to a professional, who can help you negotiate the aspects of financial planning that you haven't considered - as well as the ones you have.