The number of years people can expect to live in good health has fallen to an all-time low, according to government figures.
This has a huge impact on people’s retirement planning, as it means you won’t be able to work for as long as you need to to build up a sufficient pension.
Here, we’ll look at what you can do to future-proof your retirement income.
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Healthy life expectancy has reached a record low
The Office for National Statistics (ONS) defines healthy life expectancy as an estimate of the lifetime spent in ‘very good’ or ‘good’ health, based on how individuals perceive their general health.
While overall life expectancy has been slowly increasing, healthy life expectancy has fallen to its lowest level since data were first collected in 2011–13.
In 2022-24, men in the UK can expect to spend 60.7 years in good general health, compared to 60.9 years for women.
These numbers have declined by 1.8 and 2.5 years, respectively, compared to 2019-2021 figures.
England still has the highest healthy life expectancy at birth among UK countries for both men (60.9 years) and women (61.3 years). Meanwhile, life expectancies were lowest for men in Scotland (59.1 years) and lowest for women in Wales (58.5 years).
Here are five things you should consider to keep your retirement savings from depleting due to health reasons:
1. Start saving as soon as possible
Poor health can have a significant impact on our ability to continue working and therefore adequately fund our retirement. So it is important to start saving early.
Employees are automatically enrolled in a workplace pension from the age of 22.
It may be tempting for younger employees to opt out or delay retirement plan Because it seems so far away. But waiting until your 40s or 50s to think about retirement could prove costly.
our calculations Show that you would need total monthly contributions of £423 to achieve a ‘medium’ retirement living standard of £31,700 per year pension cut If you start saving at the age of 30. Start at £50 and the required monthly contribution rises to £1,216.
- Get more information: How much will I need to retire?
2. Build a worthwhile pension pot whenever possible
The possibility of poor health at a relatively young age puts people in the difficult position of ending up with a small pension because their working lives are short, but they need to last longer.
Wherever possible, try to increase your pension contributions whenever you can afford it – for example, when you get a pay rise.
Standard Life’s calculations show that an employee who increases their contributions from 5% to 7% of their salary at age 22 could end up with a pot of an extra £52,000 (adjusted for inflation) by age 68.
Even if you can’t commit to increasing your regular contributions, think about making an additional lump sum contribution from time to time – for example, if you get a bonus.
- Get more information: How to increase your pension
3. Maximize your state pension
state pension age That’s rising to 67 in the next year, so it’s not necessary to fill the gap if you have to stop working at a relatively young age.
When you qualify for a state pension, you should make sure you get the most from it to complement the private pension savings you have earned during your working life.
To get full level of state pension For £241.30 a week in 2026-27, you’ll need 35 years of National Insurance (NI) contributions and 10 years to get anything.
A State Pension Forecast Will give you an idea of how much you can get – and when you’ll qualify. It will also highlight any gaps in your NI records that may prevent you receiving the full amount.
If there are any gaps in your NI record (years when you have not paid National Insurance or qualified for NI credit), you can Top up your state pension By purchasing voluntary NI credits.
- Get more information: How much is the state pension?
4. Consider an Advanced Annuity
You can get your money as soon as possible defined contribution pension This happens when you reach the age of 55 (increasing to 57 in 2028).
One way to do this is to buy an annuity, which involves swapping some or all of your retirement savings for regular guaranteed payments that last for the rest of your life.
If your health is poor then you may benefit from some big gain. annuity rate.
Providers offer ‘advanced annuities’ to people with poor health or lifestyle conditions, meaning they may die earlier. If you qualify, you can increase your annual income by 20-30%.
- Get more information: Annuities explained
5. Consider Equity Release
borrowing through equity release If you are ‘wealth rich’ but unable to build up a sufficient private pension during your retirement then this could be a good option.
Lifetime mortgages are the most popular type of equity release. You take a loan against your property, which is repaid from the proceeds when it is sold.
The amount you can borrow depends on your age and the value of your home. You must be at least 55, but the older you are, the more you can borrow.
Equity release can be attractive, especially if you want to boost your retirement savings without leaving home, but it’s an expensive, lifetime commitment that isn’t right for everyone.
- Get more information: How does equity release work?
