Individuals aged 50 and above underestimate their life expectancy, creating a significant gap between their expectations and reality, according to a new study conducted by Canada Life.
On average, both men and women in this age group believe they will live until around 80 years old. But the Office for National Statistics (ONS) life expectancy calculator shows that a 50-year-old male will typically live until the age of 84, while a 50-year-old female can expect to live until the age of 87.
This discrepancy between perceived and actual life expectancy introduces additional challenges in retirement planning, says Canada Life. The choices individuals make regarding their retirement plans, particularly opting for unsecure retirement income rather than any form of guarantee, exacerbate the issue.
Nick Flynn, retirement income director at Canada Life, says: “Longevity risk is the one known unknown in retirement planning, but if people are underestimating their life expectancy, this opens up a new retirement gap.”
Despite statistical data showing that men will live approximately four years longer and women seven years longer on average than they anticipate, individuals still cling to the belief that they will only live until 80. In fact, one out of every four women aged 50 today can expect to enjoy retirement well into their 90s, with an average life expectancy of 95.
Flynn emphasised the importance of confronting one’s mortality and engaging in discussions about retirement planning. Ignoring these conversations can leave individuals ill-prepared when it comes to their retirement income. He pointed out that annuities remain the only foolproof solution against outliving one’s pension, and recent improvements in annuity rates make them worthy of serious consideration.
