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Retirement

Brits have ‘fundamental misunderstanding’ of retirement length

Lucinda Beeman
Written By:
Lucinda Beeman
Posted:
Updated:
19/05/2014

The average person significantly underestimates the length of their retirement, a survey has found.

According to annuity provider Partnership, which surveyed more than 2,000 people aged between 45 and 70, women underestimate their time in retirement by five years and men by nearly two and a half years.

Both men and women believe they will spend 16 years in retirement if they leave work at 65, Partnership said. However, in reality, longevity statistics suggest that women will live in retirement for 21 years and men 18.3 years.

In addition, Britons appear to overestimate the amount they will retire with.

When asked how much they would have in their pension pot when they retired, the average person said £76,406 despite the fact the average pension pot used to buy an annuity is worth just £34,000.

What’s more, 18 per cent admitted to having no work pension and 33 per cent to having no private provision.

Those in London and the East of England were the most optimistic about the size of their pension pot, while people in Northern Ireland and Yorkshire and Humberside – who expected pots of £56,250 and £63,406 respectively – were the least optimistic. 

Andrew Megson, managing director of retirement at Partnership, said: “While many people have been successfully managing their finances throughout their working lives, making choices at retirement requires a slightly different set of skills. Not only do they need to have an accurate and honest view of just how much their pension assets are worth but also determine how long these need to last in order to have a good standard of living in retirement.”

He continued: “Choosing to spend too much each year can result in people spending their final years struggling to survive, while spending too little means that they may enjoy a poorer quality of life than they deserve.”