Interactive Investor

What’s the cost of a 100-year life?

interactive investor calculates the cost based on the latest ONS life expectancy data.

12th January 2024 12:04

Alice Guy from interactive investor

  • ONS latest data on life expectancy show a 2% rise in those living into their 90s between 2021 to 2022
  • Overall life expectancy for those aged 65, has fallen between 2019 to 2022, according to ONS data, with men living 22 weeks less long on average than in 2019 and women living 15 weeks less than in 2019
  • interactive investor calculations show that someone living until age 100 could need an extra £260,000 pension wealth to give them a comfortable retirement, compared to someone who lives until 83 years old.

Interactive investor calculations show that someone living until age 100 could need an extra £260,000 pension wealth to give them a comfortable retirement, compared to someone who lives until 83 years old, the current life expectancy for men at 65 according to ONS figures. Likewise, someone retiring and drawing enough for a moderate retirement could need an extra £121,000 pension wealth, compared to someone who lives until 83 years old.

Calculations are based on the 2022 Pensions and Lifetime Savings Association (PLSA) Retirement Living Standards, which find 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. Interactive investor calculations are based on someone retiring at 66 and using income drawdown to take this income from their pension pot. (Please note that headline PLSA Retirement Living Standards are net of tax - sheet showing gross private pension income needed is linked under “DC pot size and income tax” on this page).

Age someone lives to

Time in retirement

Pension pot needed for moderate retirement

Pension pot needed for comfortable retirement

83

17 years

£203,000

£433,000

84

18 years

£212,000

£452,000

85

19 years

£220,000

£471,000

86

20 years

£229,000

£489,000

87

21 years

£237,000

£506,000

88

22 years

£245,000

£523,000

89

23 years

£253,000

£540,000

90

24 years

£260,000

£556,000

91

25 years

£268,000

£571,000

92

26 years

£275,000

£586,000

93

27 years

£281,000

£601,000

94

28 years

£288,000

£615,000

95

29 years

£295,000

£629,000

96

30 years

£301,000

£642,000

97

31 years

£307,000

£655,000

98

32 years

£313,000

£668,000

99

33 years

£319,000

£680,000

100

34 years

£324,000

£692,000

Extra needed for a 100-year life

£121,000

£240,000

Sources and assumptions: PLSA Retirement Living Standards, income drawdown based on 5% investment growth net of fees, income withdrawn increases by 2% each year.

Alice Guy, Head of Pensions and Savings, interactive investor says: “Your life expectancy has a big impact on how much you will need in your pension pot, with those living longer potentially needing a much bigger pension pot to last throughout their retirement. 

“Despite slightly falling life expectancies during the Covid pandemic, the number of older people over 90 actually increased 2% in the year up to 2022, according to the latest ONS estimates. The wonders of modern medicine are keeping more of us in good health for longer, with a knock-on affect on our pension planning.

With more of us living into old age, it’s difficult to know how long our pension needs to last. The average retiree will need their pension pot to last between 17 to 20 years in retirement, with women living 3 years longer on average than men. But that’s only an average and many more are now living beyond 90-years old and will need their pension to last a lot longer. Live until 100, and you could need £260,000 more than if you lived until 83 years old. And running out of money could mean relying on only the state pension, which will only be enough for a no-frills, frugal retirement.

“And it’s also important to consider possible care home costs, as part of your retirement planning. The average nursing home now costs around £61,000 each year so two years in a care home could cost around £122,000, although cost of care in the home are usually cheaper.

“For those who are still working, the good news is that nearly all employees now automatically save into a workplace pension, which can build up to a sizeable sum by the time you retire. It’s important to keep an eye on how much you have saved and see if you’re on track to reach your retirement goals.”

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