When do you think you’ll die? It’s probably not a question that you want to think about, but having an idea of when you’re likely to pop your clogs may help with planning for your future.
The Office for National Statistics (ONS) lets you calculate your approximate life expectancy. The reason for this is to do with pensions – the longer you’re expected to live after retirement, the larger your pension needs to be to ensure that you have enough money to live on.
In Britain, pensions broadly fit into three types:
- The state pension, which everyone gets. The amount depends on how much you have contributed to National Insurance during your working life; those that have contributed very little will just get a basic amount, ranging to the ‘full’ or maximum amount for those who have contributed for most of their working lives.
- Company pension schemes, officially known as workplace pensions, where a portion of your pay goes into a fund managed by the company or a related organisation. In most cases, your employer also contributes to your pension. Nowadays, all new employees aged 22 and above, and who earning over £10,000 per year, are automatically enrolled on a workplace pension unless they opt out.
- Personal or private pensions, which individuals can set up with banks and financial institutions. Essentially long-term savings accounts where the money can only be accessed at retirement.
Everyone gets the first one, and most people get the second one. This includes me – I don’t have a personal pension, but have been paying in to my workplace pension for quite a few years now. And unless things go horribly wrong in future, I should be able to make enough National Insurance contributions to get a full state pension on retirement.
For me, retirement is a long, long way away. Brits can calculate their retirement age here – I’ll get my state pension in 2052, some 37 years away. In other words, I’m not even halfway through my working life.
But that doesn’t mean that it’s too early to save for retirement. The ONS calculator is basic and only asks for your age and whether you’re male or female, but it told me that I can expect to live to the age of 88. There’s a one in four chance of me lasting another 10 years, and a one in ten chance of my reaching the ripe old age of 104.
If anything, I’d say that was pessimistic, based on my family circumstance. My great grandmother made it all the way to 102 when she died. Her son, my grandfather, is 94, and still very healthy in comparison with most people his age. And my dad turned 70 this year. In all likelihood, I’ll spend as long in retirement as I have being alive until now. So ensuring that I have plenty of money to live off is really important.
Christine is a smidgen younger than me, and though she retires at the same age, women tend to out-live men. So the ONS reckons she’s in with a good chance of making it to 91. She also has a good workplace pension in place.
Hopefully, a combination of our pensions, the value of our house and any extra savings we accumulate over the next thirty-odd years will ensure that we can both have long, fulfilling retirements. I’ve embedded the ONS calculator in the extended portion of this post, if you want to have a look yourself.