Is your pension ready for a 100-year life?

Tom Selby
18 June 2019

•        A 65-year-old woman today has a 7.4% chance of celebrating their 100th birthday (4.7% for a man of the same age)
•        This increases significantly for future generations with a 25-year-old woman having a 19% chance of reaching 100 (14.1% for a man the same age)
•        56,000 people are expected to reach 100 by 2020 - compared to just 6,000 in 2016* 
•        A pension fund of £447,000 is required to retire at age 65 on an average UK salary that could be sustainable until age 100 
•        Five top tips to ensure you don’t run out of money in retirement

Probability of a 100-year life

Age now

Chances of living to 100



















Source: ONS life expectancy calculator -

Tom Selby, senior analyst at AJ Bell, comments: 
“The pension freedoms have created huge flexibility for savers to manage their retirement plans. This flexibility comes with added responsibility and in particular millions of savers now need to manage longevity risk in a way they might not have done pre-2015.
“People who choose to transfer out of defined benefit schemes or opt for drawdown over buying an annuity therefore need to plan withdrawals carefully to make sure they remain sustainable. 
“Younger generations in particular will need to consider the possibility their pension savings will need to last 35 years or more or they will need to retire at a later age.”

Making your fund last to age 100
“The extent to which a withdrawal strategy is sustainable or not will depend on a number of things including overall investment returns, the timing of those returns and inflation.
“If someone wants to retire today on a UK average salary of £28,000, if we assume they will get around £8,770 from their state pension, they will need to be aiming to generate just under £20,000 from their private pension pot.
“A 65 year old would need a pension fund of £447,000 to be able to withdraw £20,000 a year, inflation linked at 2% a year and still see their pension last until age 100.
“However, if they delay retirement five years to age 70 the size of pension fund needed to reach age 100 would reduce to £407,000.” 

Pension fund required for an inflation linked pension income of £20,000 to last until age 100:

Retirement age

Starting income

Pension fund required

Total income taken to age 100













Assumes 5% investment returns post charges, income inflation linked at 2% a year, pension fund runs out at age 100

Saving levels required 
“The best way to ensure a comfortable retirement is to start saving early and often.  To save the £447,000 required for an average salary in retirement from age 65 to 100, a 25-year-old would need to save £235 a month.  Delaying by 10 years to start saving at age 35 sees the monthly saving figure almost double to £428 and if you wait until age 45 it is a whopping £859 a month. 
“If these amounts sound unrealistic it’s still worth saving what you can, making the most of the bonus of pension tax relief and the matched employer contribution through automatic enrolment.
“You also need to think carefully about the investment risk you want to take. Younger investors in particular should be able to take more risk than their older counterparts, giving their fund the chance to grow over time. In addition, high charges can have a seriously detrimental impact on your retirement over the long-term, so shopping around is absolutely critical. 
“If people get this bit right and build a decent pension pot in the first place, it becomes much easier to make that pot last – even over a lengthy retirement.”

How delays hit retirement savers in the pocket

Starting age

Monthly personal contribution required

Fund value at age 65










Assumes 5% investment growth per year after charges

Five top tips to ensure you don’t run out of money in retirement
1.     Set a reasonable income target – 4% of your initial fund value, increasing in line with inflation, is a decent starting point for a healthy 65-year-old. You might be able to take more than this if you retire later (or have other income sources), and less if you retire earlier
2.     Make a budget and stick to it. This will help ensure you stick to your spending limits during retirement
3.     Shop around the market and keep costs as low as possible. This will help ensure your fund isn’t eaten up by unnecessary charges
4.     Get all your pensions in one place if you can (but be careful not to lose any valuable guarantees in the process). Savers often lose track of pensions during their lifetime, potentially leaving them facing an income shortfall in retirement
5.     Review your funds, provider and withdrawal strategy regularly (at least once a year). If your funds have performed well you might be able to increase your withdrawals. Equally, if they’ve struggled you might need to think about cutting back your income

Tom Selby
Senior Analyst

Tom Selby is a multi-award-winning former financial journalist, specialising in pensions and retirement issues. He spent almost six years at a leading adviser trade magazine, initially as Pensions Reporter before becoming Head of News in 2014. Tom joined AJ Bell as Senior Analyst in April 2016. He has a degree in Economics from Newcastle University.

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