ONS cuts long-term life expectancy projections…but we’re all STILL living longer

•        By 2043, average male life expectancy at birth is now expected to be 82.6 years and female life expectancy at birth 85.5 years (https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections/bulletins/nationalpopulationprojections/2018based)
•        Both figures have been reduced by about 1 year since the ONS last published UK-wide population estimates in 2017
•        Combination of net migration and an ageing demographic likely to see the population increase by around 3 million in the next 10 years
•        Both men and women are still living longer, and need to take steps now to prepare for retirement

Tom Selby, senior analyst at AJ Bell, comments: 

“In the past decade or so life expectancy improvements in the UK have slowed to a near standstill. It is not clear yet precisely what has been the cause of this change, although many have pointed the finger at the Government-led austerity programme implemented in the wake of the financial crisis.
“The official statistics body is now reflecting this trend in its longer term life expectancy predictions, and expects both men and women to live around 12 months less on average in 2043 than it did when it last produced the forecasts in 2017.
“It’s important to note the data still points to improving life expectancy over time, just at a slower pace than the ONS previously thought. 
“So for example, the average male life expectancy at birth in 2043 now stands at 82.6 years, compared to 83.6 years when the ONS last ran the numbers in 2017. However, even with that drop in life expectancy improvements, it still represents a rise of over 3 years compared to today (79.3 years).”

Preparing for a longer retirement 

“For those approaching retirement, average life expectancy at age 65 is probably a better (although by no means perfect) indicator of when they might depart this mortal coil. The latest figures suggest life expectancy at 65 is around 18.6 years (83.6) for males and 21 years (86) for women*.
“With the state pension age on the rise to reflect decades of life expectancy improvements, the emphasis now more than ever is on individuals to provide for their own future. 
“And it’s worth noting that while average life expectancy at 65 might be in your mid-80s, there’s around a 1-in-4 chance you’ll reach your mid-90s and every possibility you’ll celebrate your 100th birthday. 
“It therefore makes sense to factor this into your long-term savings plans. However, it’s important not to be put off by the size of the fund you’ll need to save to replicate your income during work. In many cases costs in retirement will be significantly lower, and by putting a bit aside regularly the process becomes much more manageable.”
*https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/whatismylifeexpectancyandhowmightitchange/2017-12-01

What size pension pot might you need to provide £20,000 a year to age 100?

Assumes 5% investment returns post charges, income inflation linked at 2% a year, pension fund runs out at age 100

How much do you need to save each month to get there?

Assumes 5% investment growth per year after charges