Longevity

Longevity is a more sobering factor as we need to consider how long we think we may live.

On the plus side, our better standards of living and advances in medical science mean we are living longer, but the difficulty is ensuring we have enough money to last and to live the life we want.

pic 8

The above chart shows the number of years life expectancy in retirement of both a male and female reaching the age of 65 in 2013.

It means for example, without taking state pension or inflation into account, a 65-year-old male needing £10,000 per annum income would need savings of at least £210,000 to maintain his income at today’s prices, up to age 81. Add inflation, or if you were looking at converting a pension fund into an annuity, the fund needed would be much greater.

It would be fair to say that as we get older we may not spend as much, but the pace of inflation will most probably ensure that our income requirements in later retirement will not fall much below our starting income, if at all.