I hope I die before I get old

Posted on Apr 18, 2018

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We know that, for many people, planning for their retirement isn’t very high on their agenda. One would tend to assume that’s because they are too busy enjoying life to start worrying about the future… However, new statistics from the Institute for Fiscal Studies (IFS) paint a different picture. The figures show that many of us just assume we won’t live that long…

In the report, funded by the IFS Retirement Savings Consortium and the Economic and Social Research Council, IFS researchers draw on a large household data set to investigate individual survival expectations and their relation to health, wealth and other individual circumstances.

The results showed that individuals from a range of ages underestimate their chances of survival to ages 75, 80 and 85, on average. 

Those people in their 50s and 60s underestimate their chances of survival to age 75 by around 20 percentage points and to 85 by around 5–10 percentage points. For example, men born in the 1940s who were interviewed at age 65 reported a 65% chance of making it to age 75, whereas the official estimate was 83%. For women, the equivalent figures were 65% and 89%.

Strangely, we seem to overestimate our chances of surviving to ages 90, 95 and above once we hit our late 70s and 80s.

While the pattern of ‘pessimism’ about surviving through their 50s, 60s and 70s is common across many groups of individuals, some groups are more ‘pessimistic’ about their survival chances than others. Perhaps understandably, widows and widowers show much greater pessimism than others at age 60. 

Underestimation of chances of surviving through their 50s, 60s and 70s may mean that individuals save less during working life, and spend more in the earlier years of retirement, than is reasonable given their actual survival chances.

David Sturrock, a Research Economist at IFS and an author of the report, said: “As individuals are given more responsibility for saving for their retirement, and more freedom over how they use those savings in their later years, it is a particular concern that many are systematically misjudging their longevity.”

The truth is none of us has a crystal ball – so it’s worth being prepared and having your pension arrangements reviewed well in advance of drawing benefits. At The Goodman Partnership, we can help you to understand if your lifestyle needs can be met in retirement and how the different options of drawing benefits compare.

With an increasing number of us living up to 30 years post-retirement – whether we think we will or not – it’s worth being as well prepared as possible.

Give us a call on 01892 500600 or visit: https://www.goodmanifa.co.uk/our-services/retirement-planning-kent



Goodman Chartered Financial Planners is a trading name of Fairstone Financial Management Ltd. Fairstone Financial Management Ltd., is authorised and regulated by the Financial Conduct Authority – FRN: 475973 Registered in England and Wales no: 05574120. Part of the Fairstone Group. Where you have a complaint or dispute with us and we are unable to resolve this to your satisfaction then we are obliged to offer you the Financial Ombudsman Service to help resolve this. Please see the following link for further details: www.financial-ombudsman.org.uk.