Marvin OnumonuRetirees risk running out of money because they often underestimate how long they’ll live, research from Aviva and Age UK found.
The Retirement Reality: Managing Money in Mid-Retirement report showed nearly a third (30%) of retirees in their 70s had already outlived the age they expected to reach when they were in their 50s.
Most (77%) still didn’t think they’d live past 85.
In reality, one in four men aged 70 were expected to reach 92, and one in 10 could get to 96.
For women, 5% of 70-year-olds had a chance of reaching 100.
Emma Douglas, wealth policy director at Aviva, said: “We don’t have a crystal ball to tell us how long we’re going to live – and our report findings highlight that today’s mid-retirees could be making important financial decisions based on incorrect assumptions about life expectancy.
“It can be tricky to get the balance right for a sustainable retirement income – living for now, while also saving enough for later life.
“A step in the right direction is to ensure you are fully informed.”
Douglas added: “Having the right conversations with the right people, and at the right time, will help you to get ready for a retirement that might be much longer than planned.”
The report found decision making around finances becomes harder with age, especially due to cognitive decline.
It said people should stay involved with their retirement plans, pay attention to pension withdrawals, and consider annuities.
A ‘set and forget’ approach was not enough if retirement lasted longer than expected.
The report called for a change in attitudes, with simpler products like Aviva Guided Retirement providing flexibility in early retirement and a guaranteed income later on.
Aviva’s advice included planning for the long-term, checking pension withdrawals, looking at annuity options, considering blended retirement solutions, and talking about finances regularly.
Reviewing spending and savings was essential, as overspending early could leave people short, but being too cautious could mean not enjoying retirement.
Talking to friends, family, and financial advisers was also recommended to help savings last.
