Traditional views of retirement are being called into question as the Office for National Statistics (ONS) reports growing numbers of people age 90 or over.
With ongoing developments in medical research and public health, it is no surprise that the number of people over the age of 90 keeps growing. ONS figures from 2018 shows an increased total of 584,024 (up 0.7% from 2017).
A longer, more costly retirement
With so many now living longer, retirement funds have many more years to cover than ever before. As people are now anticipating an extended retirement, we are already noticing changes in employment with many continuing to work for longer, progressing into semi-retirement to achieve a work-life balance that suits them, while still bringing home an income.
Care costs are an important consideration for those in or entering the retirement bracket. While living longer is a positive, it also means that an increasing number of people are living in a relatively poor state of health for more of their lives, which can have a significant impact on the funds set aside for a comfortable retirement.
The impact of the changes to how you can access your pension
Since April 2015, people have had greater flexibility when they come to access their pensions. Prior to these, if you could not demonstrate a minimum level of secure income in retirement, you were required to purchase an annuity(a fixed income for life) or take an income capped by the Government. The introduction of freedom and choice in pensions has opened up new ways for people to access their pension savings, giving them complete flexibility over how much they can take out of their pension and when. However, it has also opened them up to new challenges, complexity and risk. Given the complete flexibility one now has with regards to their pensions, it is important to factor in that people are expecting to live longer and that this should be taken into account when deciding how much to draw from their pension, to ensure that they do not run out of money later in life.
Everyone’s circumstances are unique. Do not underestimate the need to set targets and plan ahead to ensure that you are on track to have a comfortable retirement, that you can sustain throughout your entire retirement.