UK retirees to outlive pension savings by 10 years

Recent research has found that on average retired individuals in the UK could outlive their retirement savings by more than 10 years.

The report has been carried out by the World Economic Forum (WEF)*. And it revealed that pension pots across the globe are not keeping pace with rising life expectancies. This means that in order to cover the costs of a comfortable retirement, pensioners will need to save more money – whether that’s by putting more away, working for longer or by earning more money.

The figures revealed that the average female in the UK will outlive her savings by 12.6 years. Whereas for the average man it was found he’d run out of savings 10.3 years prior to his death.

The study was calculated by taking the average savings at retirement for countries around the world. This was then calculated on how long that amount would last based on an assumed reduced income of 70% final pay.

Some relief does come from the fact that the report does not factor in the state pension. Although for younger people in particular, this should not be relied on. Especially as in 2018, the Government’s Actuaries Department (GAD) warned that National Insurance contributions would need to rise for the state pension to exist in its present form. Otherwise it could be exhausted by 2033.

What about other parts of the world?

While Britain’s retirement savings gap is relatively high, it is not the biggest out of the countries studied. Altogether the report analysed six countries, with Japan being reported as worse off.

The findings calculated that the average pension pot in Japan will cover only 4.5 years of retirement. There, women are expected to outlive their savings by 19.9 years, compared to men at 15.1 years.

Women left worse off

The report also found that overall women are left worse off than men. For most countries women were found to be facing an extra two or three years of uncertainty. Women are particularly impacted because they have longer life expectancy. It’s also common for them to take time out of their career to raise children or look after elderly relatives.

Bridging the gap

On releasing the findings the WEF commented that shortfalls must be addressed by both individuals and policy-makers to ensure that seniors can enjoy life during their non-working years.

Gareth Smith – Retirement solutions manager at Skipton stated: “In the UK, the pensions and investments industry can seem like a crowded field. Meaning it’s hard to know where to look when it comes to planning for retirement. This is where sitting down with a professional adviser may help.

“Even if you’re already retired, you may have loved ones who are still saving towards their retirement. Can they be confident they’re putting enough away to last?

“If you or your loved ones are unsure, sitting down with an adviser will allow you to review your current pension set-ups. Including if you’re on track to save enough to last your retirement.”

*FT Adviser (2019) ‘Retirees to outlive savings by ten years.’

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