One in ten believe their pension will need to last just ten years

One in ten people (12%) believe their pension income will need to last just ten years. From April, people will be able to start accessing their pension at age 55 and there are fears that a significant number of people may underestimate how long their pension needs to last and outlive their savings. These fears may be justified given around one in six (16%) people intend to start accessing their pension at 55.

While there is cause for concern, the majority of people intend to wait until age 62 before accessing their pension income and expect it will need to last 19 years. Whether people realise it or not, this is a  realistic plan given that life expectancy is currently 812 meaning people have correctly calculated how long their savings may need to last.

David Macmillan, Managing Director at Aegon said: “The new pensions freedoms give people far greater control over their savings and should be welcomed but it’s difficult to know how many people are going to be tempted into spending money they may need at a later date. 

“Our research is encouraging as while around one in ten expect their pension will need to last just ten years, the majority of people do not intend to start accessing their pension until their early sixties and they have a realistic idea about how long their retirement may last.

“Even if the numbers who may overspend in early retirement are relatively small, it’s still worrying as the state pension is designed to provide a basic level of income rather than a comfortable retirement and most people will not want to rely on this alone. It’s crucial that the pensions industry and the Guidance Guarantee, when it comes into place, make it clear to people that there are risks to drawing an income too soon and emphasise the importance of having a long-term retirement income plan.”