We're all going to live much longer which is great news. But it will also bring financial problems, as pension expert John Lawson of Aviva explains.
“How long will your money last?” he asks. “It’s a problem that many people will have to face.” He points out that a man retiring today at age 65 will live, on average to 84. But if you’re a saver, and have been planning ahead financially for your retirement, you’re likely to live even longer as, statistically you’re likely to be in better health.
The fact that we’re all facing longer lives will be particularly thrown into focus next month when hew pension freedoms come in, he warns.
“The chance to take the cash out of your pension pot sounds like great freedom, but people need to be really careful. If they spend the money too quickly they’ll have an impoverished later life.”
He advises people to think very hard before taking money out of their retirement savings. Because of the tax implications he reckons many people would be better off taking cash out of their Isa rather than their pension, for instance.
Or people can simply draw an income out of their pension pot and delay taking out an annuity until much later on, he says. He advises people to talk to their pension adviser and take advantage of the government advisory service Pension Wise.
For the full discussion about what the factors that affect your longevity and what you should do to prepare for your longer life, check out the video.Reuse content