How to Adjust Your Pension Strategy for Increased Longevity

According to Macrotrends, the average life expectancy in the UK is 81.92 years. That’s an increase of 0.18% from 2023. As UK life expectancy has increased, it's important to consider this when planning for retirement. As people live longer, their retirement savings need to stretch further. To ensure your retirement fund lasts throughout your golden years, careful planning and increasing your savings are crucial.

If you haven’t already thought about this, we will explain how to adjust your pension strategy for increased longevity in this article.

The effects of longevity on your pension

The Pensions Act 2014  gradually increases the state pension age to 67 by the end of 2028. That means the average person retiring at 67 will have 15 years of retirement. In many cases, it will be longer. 

Your state pension will be set at a rate controlled by the government. It should last the length of your retirement but it’s unlikely to be enough to enjoy the comfortable retirement you dreamed of. That’s why most people speak to wealth management specialists and build private pensions. However, careful planning is still crucial, as how quickly you spend your retirement savings will impact how long they last. There are many factors which can influence the speed at which you spend your pension:

• Increased spending – simply spending your money too quickly as you have more leisure time
• Long-term sickness – can result in the need to purchase additional equipment
• Inflation – reduces the spending power of your weekly income 

Inflation is perhaps the biggest issue everyone faces as it causes prices to rise, and your income won’t necessarily rise at the same rate.

Fortunately, there are adjustments you can make to your pension strategy today to help you prepare for a longer period of retirement. 

Increasing contributions

If you haven’t yet retired then you should speak to a retirement planning specialist. They can help you review your current pension arrangements and your finances. If you can afford to pay more into your pot now, you’ll have a larger fund in the future and this will mean your pension could last for a longer. 

Delaying retirement

Just because you can retire at 55 or take a state pension at 67, doesn’t mean you have to. If you’re still fit and healthy and enjoying working, consider delaying retirement. This will allow your pension pot to grow and can make a substantial difference in how long it lasts.

It’s even possible to defer your state pension, it increases in value by 1% for every 9 weeks you defer!

Spousal benefits

Some private pensions include a death benefit or continue to pay a percentage of your pension to a loved one in the event of your death. It’s important to check your pension to see if this is included. In addition, you can claim extra payments from the government if your husband, wife, or civil partner dies and you’re over state pension age. 

Get in touch with us now to check and, if necessary, adjust your pension strategy.

The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.