Financial experts are warning those who plan to take advantage of the Government’s announcement of being able to access their entire pension fund once they reach the age of 55 not to underestimate how long they will live for.
According to research by MGM Advantage the average worker approaching retirement age is underestimating how long they liv e for from 5-10 years.
The survey showed that 82% of people questioned between the ages of 55 and 64 thought they would die much sooner than they are statistically likely to.
The Office for National Statistics (ONS)data shows that the average British male will live until till he is 86 and women until they are 89. However, this vastly differs from what age people think they will die.
Men estimated that they would die at an average of 81 – 5 years earlier than likely. And women estimated their death at 79, a full decade before the ONS figures suggest.
The implications of people underestimating their lifespan could be serious in terms of ensuring how they invest their pension will see them through their entire retirement.
MGM Advantage warns that many people may not make adequate provision for the duration of their retirement and may invest badly thinking they won’t be alive as long as they probably will be.
For those who choose to shun an annuity product which guarantees an income for the duration of a person’s life, they may find they have exhausted their pension fund and are left to rely solely on the state to see them through their final years.
With the recent industry shake ups, the annuity market offers much better value than it has over the previous years. People are now encourage to shop around to ensure they get the best deal for them, and to look into enhanced annuities if their lifestyle choices could shorten their lifespan.
Pension providers now have to communicate with their clients a year before they are due to retire to discuss their options, including offering comparisons to other providers annuity products and insisting that the customer shops around before deciding upon an annuity.