The odds of celebrating your 100th birthday are greater than you might think, with a growing number of people expected to reach this landmark age.
There were 15,120 centenarians (people aged over 100) in England and Wales in 2022 – an increase of 31% in a decade, according to new data issued by the Office of National Statistics in January 2024 and analysed by Rest Less.
Our research shows that the number of centenarians has more than doubled in the past 20 years – up from 6,920 in 2002 – a 112% increase. Rest Less also found that 82% of the centenarians in England and Wales were female – an overwhelming majority but a reduction from 86% in 2012 and 89% in 2002.
The average 50-year-old woman in the UK has an average life expectancy of 87 years, but there is one in four chance she’ll live to 95, and about a one in thirteen (7.8%) chance that she’ll reach 100-years-old.
Stuart Lewis, Chief Executive of Rest Less, said: “‘Reaching 100 is an achievement which deserves to be celebrated but we think it’s important for attention to shift away from the age we are living to, towards the number of healthy years lived. Paradoxically, while medical advancements during the last century have resulted in an increase in life expectancy globally, this does not guarantee a healthy and disease-free lifespan.
‘With increasing numbers of us expected to live beyond 100 and evidence of growing inequality of ageing around the country, it’s important to do what we can to boost our own longevity and future quality of life. Small changes today can make a big difference to our personal ageing experience, both now and in the future – from taking daily exercise to staying socially connected, eating healthy and prioritising good quality sleep.”
If you’re lucky enough to remain in good health, reaching your tenth decade gives you longer to enjoy life and spend time with your loved ones, but it’s also likely to put pressure on your finances.
Many people are unaware of the financial impact of so-called ‘longevity risk’, or the chances that your money will need to last for three or four decades in retirement, making it crucial to plan ahead while you can.
Alice Guy, head of pensions and savings at interactive investor, said: “With more of us living into old age, it’s difficult to know how long our pension needs to last. The average retiree will need their pension pot to last between 17 to 20 years in retirement, with women living three years longer on average than men. But that’s only an average and many more are now living beyond 90-years old and will need their pension to last a lot longer.”
Here’s our rundown of some of the things you need to ask yourself to financially prepare for a 100-year life.
If you’re thinking about getting professional financial advice, you can find a local financial adviser on VouchedFor or Unbiased.
Alternatively, if you’re looking for somewhere to start, we’ve partnered with independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 1,000 reviews on VouchedFor, the review site for financial advisors.
When do I plan to retire?
Most of us can’t afford to fully retire until we reach our 60s, unless we’ve been particularly high earners or a dedicated saver who’s lived frugally. As a result, these days, many people choose to phase their retirement rather than ditch work completely, gradually reducing the amount they work until they can afford to stop fully. This can help ensure your money doesn’t run out if you live for decades in retirement.
You can typically access your workplace defined contribution pot from the age of 55 (rising to 57 in 2028) if you need to supplement your income. However, this doesn’t mean you should dip into your pot at this age. If possible, it’s best to leave your pension savings to grow for as long as you can, only taking income to increase your cash flow when needed. Read more in our article How can I phase my retirement?
Bear in mind that once you start withdrawing money from your pension beyond your 25% tax-free cash lump sum, the amount you can contribute to your pot each year and receive tax relief on will fall. You’ll one be able to pay in up to £10,000 a year under the so-called Money Purchase Annual Allowance (MPAA) once you start taking an income from your pension. This compares to £60,000 under your pension Annual Allowance. You can get tax relief on your pension contributions up to the age of 75. Read more in our articles What is the Money Purchase Annual Allowance? and How do pension allowances work?
Even if you save beyond retirement age, though, you may still worry about putting away enough to provide for a 100-year life. This is when taking advice on your retirement planning can provide valuable peace of mind and planning for your future.
How much income do I need?
As a general rule of thumb, experts suggest you need around two-thirds of your final salary at retirement after tax to maintain your current lifestyle. However, the actual amount you personally will need will of course depend on your retirement aspirations. For example, you may want to travel the world in retirement, which means you could need more income than you were earning while working.
Bear in mind, though, that the amount of income you’ll need in retirement is likely to vary through the years. You may choose to spend more in early retirement, for example, when you might be more physically active and able to tick off your retirement goals. You might then find the amount you need reduces gradually, before increasing if you need long-term care in your later years. A financial advisor can help you to navigate your financial planning in retirement to ensure that you don’t run out of money, whatever your income needs.
If you’re not sure how much income you’re likely to need in retirement, there are some basic figures that can help you to plan ahead. For most people, the State Pension will be a large chunk of their retirement income. In 2023/24 the full State Pension is £10,600 a year (this will rise by 8.5% to around £11,502 in 2024/25). The remainder of your income will be made up of income from your pension and/or other investments. As a guide, to have a ‘moderate’ living standard in retirement, you’ll need an income of about £43,100 before tax if you’re in a couple, or £31,300 if you’re single, according to the Pensions and Lifetime Savings Association’s latest Retirement Living Standards research.
The annual income you’re likely to need in retirement rises to £59,000 a year if you’re a couple wanting a ‘comfortable’ retirement, or £43,100 a year if you’re on your own, according to the Pensions and Lifestyle Savings Association (PLSA). Find out more in our article Can you afford to retire?
How much do I need to save?
As mentioned, the State Pension forms the building block of most people’s retirement income, but you’ll definitely need additional income if you want a comfortable standard of living.
Based on the PLSA figures, wealth management company, Quilter suggests that a single person looking for a comfortable lifestyle in retirement will need a private pension pot of £738,000, while a couple looking for the same lifestyle would need close to £1m (£929,000).
If you’re looking for a moderate lifestyle, the size of private pension pot a single person needs is £459,000 while a couple would need £514,000.
These figures are based on someone using a flexible income drawdown plan to provide their retirement income. This involves your retirement savings remaining invested in retirement and taking an income from your pension as and when you need to, while leaving the remainder of your pot hopefully to grow in value. Find out more in our article What is pension drawdown and how does it work?
However, saving this amount of money may seem impossible to many of us, so rather than focusing on the figures, work out what’s possible for you. Generally, a good rule of thumb is to take our age, halve it and contribute that amount of your salary to your pension each month for life. For example, if you’re 50 that means saving 25% of your salary each month until you retire. Read more in our guide How much should I save for retirement?
Where should I invest my pension?
Unless you’ve chosen a particular fund or funds, most pension savers have their contributions automatically invested into a one-size-fits all ‘default fund’.
The default fund is typically what’s known as a ‘lifestyle fund’ which will automatically change as you approach retirement. When you’re a long way off retirement, for example, your money will go into a fund invested in a broad mix of investments, but predominantly shares, with the aim of growing your pension pot. Find out more in our guide Where is my pension invested?
If you’re planning to remain invested throughout your retirement, using drawdown to take an income from your pension as and when you need it, you might be comfortable taking on more risk, as your investment horizon will be longer.
If, however, you’re likely to use your pension to buy an annuity, or income for life, when you stop work, you may want to stick with the default fund, or another lower risk option. This can provide you with peace of mind that the value of your savings won’t suddenly plummet before you need them.
How can I avoid running out of money?
If you’re using income drawdown in retirement, you’ll need to carefully manage your pension withdrawals and other assets in retirement so that you don’t run out of money too soon. These may include your ISAs and other investments such as a buy to let property that could add to your retirement income, for example. Using savings such as ISAs before your pension could reduce the amount of income tax you pay in retirement and inheritance tax, but a financial advisor can help to work out the best strategy. Find out more in our guide How much tax will I pay when I withdraw my pension?
There are plenty of online drawdown calculators that can help you see how long your money might last depending on how much income you require, the amount of tax-free cash you take out, and where your pension is invested.
For example, if you have other income from part-time work, you may choose to draw down a small amount initially, which you can increase or decrease over time. Basically, you can start, stop or change the amount you withdraw. Remember, though, that your remaining fund will stay invested so it may rise and fall depending on the performance of the underlying investments.
You could consider using some of your pension pot to buy an annuity, or guaranteed income for life, so that you know you will receive this income until you die. If you choose to buy an annuity it’s really important to shop around for the best rate, as you cannot move to a different deal. How much you receive as an annuity income depends on the type you choose, age, and health along with various other factors. The longer you wait to buy an annuity, the greater the income you will receive. Read our guide Annuities explained.
Can I use my property to provide for my retirement?
You may have money tied up in your property if you’re a homeowner that could be used to fund your retirement. For example, you might choose to downsize to a cheaper property to release some equity in retirement. Whether this is a suitable option for you depends on a range of factors, and it’s important to factor in the costs of selling and moving home. Find out more in our article Five questions to ask yourself if you’re considering downsizing.
Alternatively, you could think about using an equity release plan to unlock some of the wealth tied up in the value of your property to ease cash flow if you’re phasing your retirement. This may provide you with a lump sum, regular income or a combination of both, depending on the equity release product you choose. You won’t pay the money back, with interest on top, until you die, or move into long-term care, but equity release definitely won’t be right for everyone, so it’s essential to seek professional financial advice if you’re considering taking this route. Find out more in our article Equity release – what is it and how does it work?
If you’re looking for somewhere to start, you can get expert advice from an independent equity release specialist with Unbiased. They’ll listen to your needs and talk you through your options, so you can decide if equity release is the right option for you.
How can I plan for care costs?
Sadly, many people spend their final years in poor health, which means they need to find the money to pay for long-term care. To be eligible for help paying for care, you’ll need to have less than £23,250 in savings, including any income, benefits or pension. This means that most of us will pay for our own care costs, but fortunately, there are a growing number of ways to do this, from pension income to downsizing, equity release (see above) and deferred payment arrangements. Read more in our guide How to pay for long-term care.
Guy says: “It’s important to consider possible care home costs, as part of your retirement planning. The average nursing home now costs around £61,000 each year so two-years in a care home could cost around £122,000, although cost of care in the home is usually cheaper.
“For those who are still working, the good news is that nearly all employees now automatically save into a workplace pension, which can build up to a sizeable sum by the time you retire. It’s important to keep an eye on how much you have saved and see if you’re on track to reach your retirement goals.”
Where to seek expert advice
Ensuring you’ll be able to financially provide for several decades in retirement can be a difficult task. A financial advisor can help you to work out how much you’ll need to save and work out a sustainable income strategy.
If you’re thinking about getting professional financial advice, you can find a local financial adviser on VouchedFor or Unbiased.
Alternatively, if you’re looking for somewhere to start, we’ve partnered with independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 1,000 reviews on VouchedFor, the review site for financial advisors.
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