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.
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).
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.
How we spend our pensions
How we spend our pensions
Figures from Saga show that the over 50s now account for the majority of money spent by Brits on travel and tourism. They have the time to spare, the money, and they are healthy enough to take on the world.
A poll from Abta found that in the wake of pension freedoms, 35% of people were considering cashing in at least part of their pension to travel. A separate study by Senior Railcard found that pensioners take an average of three holidays a year, plus two weekends away, and 17 day trips.
Research from Senior Railcard found that retirees eat out an average of three times a month. However, one in ten do so more than twice a week, and one in three people said that one of the first things they did when they retired was to go out for lunch with their friends.
Of course, just because retirees want to enjoy themselves, it doesn't mean they are happy to throw money away. The vast majority are keen to eat at lunchtimes, when a fixed lunch menu tends to be cheaper, and canny retirees are skilled at tracking down pensioner special offers too.
Figures from the Office for National Statistics show that on average nearly a fifth of the money spent by people aged 65-74 is on leisure. This includes everything from the cinema and theatre to golfing and gardening. They spent more on this than on food, energy bills and transport.
A report by Canada Life found that retirees are spending £4,279 a year on having fun - that’s more than £1,000 more than they spend on boring essentials, and is a 74% increase over the past ten years. It went on to predict that this trend was set to continue, and that pension freedoms would encourage people to spoil themselves a bit more in retirement
Pensioner property wealth is now over £850 billion, and all these family homes don’t look after themselves. The Senior Railcard survey put home renovations in the top 20 activities people got stuck into on retirement, and figures from ABTA found that almost a third of people who were considering raiding their pension pots under the new pension freedoms planned to spend the cash on their home. This seems like an eminently sensible investment - looking after what is undoubtedly their most valuable asset.
Unsurprisingly, while some pensioners are very well off indeed, others are struggling with debt. Figures from Key Retirement found that the average retiree has £34,000 of debt.
Most of this is mortgage borrowing - in many cases driven up by the number of people who unwittingly signed up to an interest-only mortgage. However, credit cards, overdrafts, and loans are also common. It’s why so many pensioners have used pension freedoms to access enough cash to pay their debts.
The day to day basics are swallowing up their fair share of pensioner cash too. On average, people aged 65-74 spend a third of their weekly income on essentials like food and bills - which is hardly living the high life.
The bank of gran and grandad has become an increasingly vital source of cash for families. According to Key Retirement, of those who release equity from their property, 21% of them use the cash to treat their children and grandchildren. This includes an average of £33,350 to help children get onto the property ladder, £6,000 to buy them a new car, £11,000 on family weddings, and £24,780 giving grandchildren a helping hand.
While retirees are quite rightly spending what they need to enjoy retirement, they are hardly all throwing caution to the wind, buying flash cars and spending the kids' inheritance.
Most expect to have something left over to pass onto their family after their death. Some 69% expect to leave property in their wills, and 75% expect to leave cash - according to Unbiased.co.uk - because while baby boomers know how to have fun - they also know how to save for the future.