The number of people living to age 100 has hit record levels and while it may be nice to look forward to a message from the King, it could put extra pressure on your retirement income.
There were an estimated 625,000 people aged 90 years or over in the UK in 2024, the latest Office for National Statistics figures available; this is an increase of 53.7% since 2004, and an increase of 2.2% since mid-2023.
Of the people aged 90 years and over, 84.5% were aged 95 years or younger, although growth has been faster at the oldest ages.
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There were 16,600 centenarians (people aged 100 years and over) in the UK in 2024, this has doubled from 8,300 in 2004.
The number of men at older ages is increasing faster than the number of women; between 2004 and 2024, the number of men aged 90 years or over has more than doubled, while the number of women has increased by around one-third.
Men made up one-third (33.7%) of people aged 90 years and over in 2024, and nearly one-fifth (18.5%) of centenarians. Wales had the highest rate of centenarians (25.9 per 100,000 people) in the UK; the rate of centenarians has increased in all four UK countries.
The figures mean the “100-year life” is no longer a fantasy, says Aegon’s pensions director Steven Cameron, and while living longer is a cause for celebration, it also raises the question of how to know if and when you are ready and can afford to retire.
"Are we truly equipped, both financially and mentally, to navigate a much longer life than expected by previous generations?," says Cameron.
The 100-year life
Life expectancy at age 65 years was 21.2 years for females and 18.7 years for males in 2022 to 2024 in the UK. This is an increase of 17 weeks from 20.8 years for females and 21 weeks from 18.3 years for males since 2019 to 2021.
That may be factored into retirement plans and how you access your pension pot, but the considerations may be different if you actually have another three decades ahead of you.
Sarah Coles, head of personal finance at AJ Bell, said: “As more people are living into their 90s, we all need to consider how we would pay for three decades or longer in retirement.
“As early as possible, it’s worth using a pension calculator to see what you may be able to build by retirement and the income you’re likely to be able to take from it. If you need to take more, it’s worth considering how long you might reasonably expect your pot to last. This process will reveal whether you need to consider boosting your pension contributions.”
It may be worth delaying your retirement and working longer to earn extra money and stay invested in your pension so you have more to access later for your golden years.
You could also delay taking your state pension to boost the income at a later date.
How to make your pension last until age 100
Tom Selby, director of public policy at AJ Bell, says the "surest way" to make your pension last a lifetime is to buy an inflation-protected annuity – which provides a guaranteed income for life.
“If you’re going to go down this route, shopping around for the best rate – and making sure your provider knows of any health conditions which might impact on your life expectancy – is essential,” he says.
However, once you purchase an annuity, your pension savings are committed to this product and you can’t change your mind.
“Many people, particularly younger retirees, prefer to keep their money invested through drawdown, providing more flexibility and the potential to enjoy long-term investment growth,” adds Selby.
“Those choosing drawdown need to engage with their fund and ensure, among other things, they withdraw their money sustainably.”
If someone wants to retire today on an average UK salary of around £39,000, they might expect around £12,548 of that to come from their state pension, based on the flat-rate amount in 2026/27. This would mean their private pension needs to deliver an income of £26,452 per year, according to AJ Bell calculations.
If you assume 3.3% annual investment growth in a pension and ignore taking tax-free cash, a 68-year-old could need a pension fund of around £570,000 to be able to withdraw £26,452 a year, and still see their pension last until age 100.
To save £570,000, a 25-year-old would need to put away around £338 a month, matched by their employer.
This assumes contributions increase in line with inflation, and investment returns after charges are 3.5%
However, if they delay retirement to age 70, the size of pension fund needed to reach age 100 could reduce to around £550,000.
“From a financial perspective it is now almost prudent to assume you will reach 100, but in order to accommodate this, the old financial playbook possibly needs rewriting for a new era,” says Chris Rudden, head of investment consultants at Moneyfarm.
“Getting the risk levels right by not necessarily following the old norms that dictate people should be in low risk investments as they approach retirement, because their money needs protecting, is key.
“People are living better for longer and have big goals and ambitions far beyond retirement, so make sure your money continues to grow at a rate to match them. Slowing down is not the answer so don’t forget about ‘future you’.”
Rudden suggests taking an active interest in your pensions and savings to ensure you keep topping them up even after retirement, and that they are at the right risk level for you.
“Most policies within the pension business have assumptions automatically baked into them which may not be conducive if you are to live to 100,” he says.
“For instance, many plans default to a de-risking strategy once you approach 65 years old, but times have changed and that is potentially too early if you need your money to continue to grow for another 30-plus years.
“But life doesn’t end at 65, in some ways it’s just beginning. So you shouldn’t just cash it all into low risk bonds at 65 and then let it sit there festering for the next 35 years.”
There may be extra care and health costs to consider if you are living longer, which could eat into any inheritance you planned to leave behind.
This is why many financial advisers will recommend spending and enjoying your hard-earned pension savings before you get too old.
“We often encourage our clients to consider spending more in the early years of retirement while they have health and time on their side,” says Ross Lacey, director at Fairview Financial Planning.
“Although they may still be alive in their 80s and 90s; the ability and appetite to do things is inevitably less. We all get too old to enjoy ourselves at some point.”
