According to the Office for National Statistics, 1 in 3 children born today will live to see 100. However, there is a pessimistic attitude amongst the today’s older generation regarding how long they may live that could have a detrimental impact on their retirement income, an Aviva report has warned.
Underestimating your longevity could lead to serious financial consequences and the belt-tightening, penny pinching of later years could be even worse for some. The report, based on 1,100 respondents aged 50-65, found that 29% of men and 23% of women believed they would not reach their average life expectancy.
A growing life expectancy is the sign of a healthy nation, both literally and metaphorically, but underestimating how long you will live, even by only a few years, can have serious consequences if you have no savings left to fall back on.
The Aviva report cautioned pension savers that, ‘those people estimating they need £100,000 of private pension savings to top up their other income, such as state pension, could actually need about £150,000, if they had accurately predicted their life expectancy.’
Following the pension reforms of this April, the over-55s have the option of accessing their pension funds free of the constraints of having to purchase an annuity. As people calculate their life expectancy, and the money they need to have a retirement they deserve, housing wealth will come into the considerations of many retirees.
Unlocking the wealth tied up in the bricks and mortar of your home can deliver an invaluable added income, lump sum or drawdown facility to consolidate your pension savings.
If you are considering equity release we recommend that you read our ‘Advantages and Disadvantages of Equity Release’ page carefully.