Pensioners who live to 100 years old will need £692,000 pension wealth for a comfortable retirement, which is £240,000 extra compared to someone who lives until 84 years old, according to new analysis.
The calculations by interactive investor also found someone retiring and drawing enough for a moderate retirement could need an additional £112,000 pension wealth if they live to 100, compared to someone living until 84 years old.
While it’s hard to predict how long a person will live, with life expectancy rising, experts are urging people to check how much they are likely to need during their retirement.
Alice Guy, head of pensions and savings at interactive investor said: “With more of us living for longer it’s difficult to know how long our pension needs to last.
People may assume they'll spend less when they are older, but that’s not necessarily true, an expert has warned
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“Live until you’re 100 and you could need, £240,000 more than if you lived until 84 years old.
“And running out of money could mean relying on just the state pension, which will only be enough for a no-frills, frugal retirement.”
The figures are based on the 2022 PLSA Retirement Living Standards, which finds single pensioners need a private pension income of £15,383 for a moderate retirement and £32,882 for a comfortable retirement, assuming they have a full state pension.
The calculations assume a person retires at 66 and uses income drawdown from their pension pot.
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The average life expectancy for a 65-year-old is currently 84 for men and 87 for women.
Ms Guy said it means men will need their pension pot to last 18 years on average, while women will need their pension to last 21 years on average, however, some will need their pension wealth to last longer than this.
She added: “These figures are only averages. In fact, there are currently over 600,000 people aged over 90 in the UK, and this figure is expected to grow in the future.
“Many of us assume that we’re going to spend less as we get older, but that’s not necessarily true.
“Most pensioners want to enjoy holidays and eating out in retirement, and it can be expensive to maintain your home in retirement with maintenance and insurance costs soaring in the last few years.”
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A pensions expert is urging people to consider how much they will need in retirement
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Ms Guy is urging people to consider how much income they are likely to need when they retire.
She said: “It’s important to sit down and work out how much you need for retirement as everyone’s priorities are different.
“The PLSA figures for a comfortable retirement include three weeks abroad each year, and changing cars every five years, whereas their figures for a moderate retirement include two weeks abroad and a UK weekend away, plus changing cars every 10 years.
“Younger people have an even greater life expectancy on average than those currently in retirement.
“Modern advances in medicine and healthcare mean that life expectancies are gradually increasing and the average life expectancy for babies born today is expected to be 87 for boys and 90 for girls meaning that young people will need to save more on average for a comfortable retirement than current retirees.”
