Retirement costs hit by increasing longevity
The average cost of retirement in the UK has hit £413,000, according to Life Trust Insurance.
A report published by the retirement specialist Life Trust showed increasing longevity is impacting on the cost of retirement and means retiring at 65 years old and living to 100 would see the cost rise to more than £700,000. Retirement now costs a typical household £413,000 and an individual living alone £326,700. The report, which was written by the Centre for Economics and Business Research (CEBR) for Life Trust, warned people to factor in increasing longevity when planning retirement finances.
It added that while current life expectancy predictions are 85 years old for a man and 88 for woman, these are set to rise significantly. Someone who is 35 years old today has an almost one in three chance of reaching 95 years old and a one in seven chance of reaching 100.
In addition, these findings were based on a long-term forecasted inflation rate of 2.3%. However, according to the report, if inflation were to remain at today’s level (3.4%), the cost of retirement would rise to £1m for the average person living to 100 years old. But, if inflation were to hit 4.6%, the cost of retirement for someone that lives to the age of 100 would reach £1.3m.
The report also revealed early retirement costs an additional £373,300, on average and age 92 is the most expensive year of retirement. At this age, a retiree would spend 50% more across this year than they would have spent at 65 years old.
Andy Briscoe, CEO of Life Trust, said: “People are living longer, healthier lives. This is great news but only if people have the finances in place to really enjoy their post-career years. The combination of rising life expectancy and the impact of inflation over time can have huge financial implications, and this report allows us, for the first time, to see the scale of these trends.
“With more and more people reaching 90 years old and beyond, and with 90 becoming the new 70 in terms of healthy ageing, it has never been more necessary for the industry and individuals to understand the true cost of modern retirement.”