By Salma El-Sakka
Britons are living longer than ever, with the number of centenarians soaring nearly 90 per cent over the past two decades, according to the Office for National Statistics. The population aged 90 and over has also jumped 55 per cent since 2005, reaching 645,000. While longer lives are cause for celebration, they raise urgent questions about funding retirements that could stretch 30 to 40 years.
Rising Centenarian Numbers
The Office for National Statistics reports a near 90 per cent increase in centenarians over 20 years and a 55 per cent rise in people aged 90-plus since 2005, now totalling 645,000. This demographic shift means retirement savings must last far longer than previous generations planned for.
Retirement Savings Gap
Fidelity International research found 28 per cent of UK pre-retirees aged 50 and over do not know how long their savings will last. A simple illustration: targeting £30,000 annual income from age 65 requires £750,000 to last to 90, but £1.05 million to reach 100 – before accounting for investment growth, inflation, tax or the state pension.
State Pension Shortfall
From April 2027 the maximum state pension will be just over £13,000 a year. Someone aiming for £30,000 would need to generate the remaining £17,000 annually from other sources, a shortfall exceeding £610,000 over 35 years before investment returns or inflation.
Building a Pension Pot
Experts recommend using pension calculators to project savings and identify gaps. Sarah Coles of AJ Bell suggests boosting contributions if a shortfall appears. She also warns of sequencing risk – withdrawing too much early during market downturns – and advises variable withdrawal strategies or regular reviews of fixed-percentage drawdowns.
Annuities for Guaranteed Income
Annuities provide lifetime guaranteed income, covering essential bills regardless of market performance. Clare Moffat of Royal London notes a blend of partial annuitisation and drawdown can balance security and growth, though inflation-linked annuities start at lower rates.
Care Costs in Later Life
Later-life care – domestic, residential or nursing – can replace reduced lifestyle spending. Lucie Spencer of Evelyn Partners highlights that medical and heating costs may rise, making it essential to plan for care expenses when projecting whether a pension can stretch to 100.
