For decades experts have taken for granted the fact life expectancy improvements will continue unabated. And why wouldn’t that be the case? Billions of pounds is ploughed into medical research every single year as the scientific community finds new ways to battle life-limiting illnesses and disease, while Government interventions like the smoking ban have been effective in shifting human behaviour.

However, a study by former Government health adviser Sir Michael Marmot suggests that since 2010 life expectancy rises have shuddered to a near standstill.

GROUND TO A HALT

According to Marmot improvements in life expectancy at birth, which had previously been around a one-year increase every five years for women and every three and a half years for men, have slowed to a one-year increase every 10 years for women and every six years for men.

A number of culprits have been blamed by experts, most notably post-financial crash austerity cuts to local authority budgets and the rise in deaths linked to dementia and Alzheimer’s. While it’s impossible to apportion blame to any one of these factors, it’s a fair bet that a combination have contributed to the declining rate of growth in life expectancy.

But when it comes to planning your own retirement it’s worth considering longer term trends in life expectancy. The recent reduction in improvements – and it’s worth remembering that we are all still on average living longer, just by a bit less – follows decades of life expectancy improvements.

To give some context, women’s average life expectancy at age 65 has risen 4.6 years from 18.9 in 1989 to 23.5 in 2014. Men’s life expectancy at age 65 has risen 5.8 years from 15.3 in 1989 to 21.2 in 2014.

Furthermore, an independent report published by John Cridland suggests a baby girl born in 2017 can expect to live to be 94 years and a boy to be 91.

Clearly we don’t know what the future holds. If science finds a cure for cancer, for example, average life expectancy could shift upwards dramatically.

CAN’T PREDICT THE FTURE

Even without such developments it’s worth remembering that – based on current assumptions – there’s a good chance someone retiring at 65 will need their pension pot to stretch out over 20 years or more.

The best way to ensure this is possible? Save as much as you can, as early as you can to maximise the benefits of compound growth; and build a retirement income strategy knowing your pot may well
need to last for decades rather than years.

Tom Selby, Senior Analyst, AJ Bell

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