As Office for National Statistics (ONS)[i] data reveals the over-90�s population of England and Wales reached a record high in 2022, Steve Butler, CEO of retirement solutions at Punter Southall says this could bring major pension funding challenges as it effectively adds another lifetime beyond the retirement age of 66 to fund.
The number of over-90s grew by 2.1% over�2022 to a high of 550,835 and that the number of centenarians had more than doubled since 2002. While it�s something to be celebrated, it will make it more challenging for people to fund such a long retirement.
Steve Butler says, �Living longer is something we strive for, but most of us are unprepared to live for 30 years or more in retirement, and risk running out of money in our 80s and 90s. There is also the additional fear of having to pay for social care in the future.
�The government currently is ill-prepared for the social care bill of an ageing population, which means people may have to use their savings or even sell their home to pay for any care they need as they get older.
�It is vital people focus on the retirement challenges they may face in the future.� Relying on structural and government change to happen by the time they reach their nineties is a risky option and one which could leave them severely out of pocket.�
Many people already worry their pension won�t be sufficient, with new research from Canada Life[ii] revealing that half of non-retired Brits plan to work beyond state pension age. The findings show that 36% will work longer due to worries�their pension will not be enough to cover day-to-day expenses in retirement,�rising�to 52% in Brits aged 55 and over.
Steve Butler adds, �One sensible solution is for those nearing retirement is to take out an annuity which can provide a guaranteed income for life and give them a safety net and reassurance they won�t run out of money no matter how long they live.
�Annuities that were once out of favour are back in fashion due to rising interest rates, and we�ve seen annuity incomes rising 44% in two years[iii]. However, misconceptions around annuities persist such as having to stay with your pension provider, that ill health can rule out the best deals and that you can�t pass an annuity on after you die.
�It�s important to check the whole market when seeking an annuity as rates can vary enormously.� With annuity incomes on the rise, making informed decisions about drawdown options before cashing in a pension is essential to avoid costly mistakes that could significantly impact what could be 30 years or more of retirement ahead.�
Punter Southall Aspire offers a retirement service called Pension Potential which offers financial information, insights and guidance about retirement options and taking benefits. It includes and online calculator that provides an independent overview of the best annuity deals.
Pension Potential searches the entire market and shows people how much their pension can buy, making it easy to see the right deal for them. It�s free for companies and free for employees to use, and helps staff to quantify their retirement, consider their options and compare every annuity on offer.
For more information visit: www.pensionpotential.co.uk.
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References
[i] https://www.financialplanningtoday.co.uk/news/item/17006-pension-challenge-as-over-90s-at-record-high?utm_source=newsletter_4519&utm_medium=email&utm_campaign=morning-news-pension-challenge-as-over-90s-at-record-high
[ii] https://www.ftadviser.com/pensions/2024/01/12/half-of-non-retired-brits-plan-to-work-until-age-72/?utm_content=278485058&utm_medium=social&utm_source=linkedin&hss_channel=lcp-10391893
[iii] https://moneyweek.com/personal-finance/pensions/605406/buy-an-annuity
