Increased life expectancy figures must serve as a warning for employees to save for retirement
Twenty year olds are three times more likely to reach 100 than people of their grandparent’s age (80 year olds), and roughly twice as likely to reach 100 than people of their parent’s generation (50 year olds) new analysis reveals.
These figures, released yesterday from the Department for Work and pensions (DWP) also show that a baby born this year is almost eight times more likely to reach 100 than one born in 1931. A baby girl born this year has a one in three chance of living to 100 and a baby boy has a one in four chance.
Minister of State for Pensions Steve Webb said :"These figures show just how great the differences in life expectancy between generations really are. The dramatic speed at which life expectancy is changing means that we need to radically rethink our perceptions about our later lives. We simply can't look to our grandparents' experience of retirement as a model for our own. We will live longer and we will have to save more."
In 2066 there will be at least half a million people aged 100 or over.
Fraser Smart, MD of Buck Consultants, said: "Increased life expectancy figures from the DWP will not help us to win the long-running battle to persuade those at the start of their careers to consider long-term saving.
"The dramatic increase in projected life expectancy for a child born today should demonstrate that people will now live longer in retirement and therefore need to apply a greater sense of urgency to their planning. However, there is a danger that, as retirement ages are pushed back and people face significantly longer working lives, many may be convinced that they can afford to further delay the process of pension saving.
"In order to continue saving effectively, people need to look at these new life expectancy figures, alongside the average period they expect to spend in retirement, and from that determine a realistic retirement date or age. The reality is that by sharing the increase in life expectancy between working life and retirement, there is a longer period over which to save, which should reduce the burden on individuals. In short, it is a question of mindset.
"We expect forthcoming auto-enrolment will help to shift perceptions and change attitudes but the whole country needs to get behind the more pensions-positive message. All parties must now focus on demystifying the pensions landscape and educating everyone on the benefits of long-term saving, regardless of your ultimate retirement date."