Clocking up the miles

Nigel Barlow looks at the effects of living longer on retirement planning.

It’s often demonstrated that life expectancy, particularly over the past 30 years, has been ­increasing.

It is often overlooked how much it can vary – in all sorts of different ways that seem almost designed to make life hard for those giving advice (although I’m sure that’s not the intention).

In general, life expectancy has improved as a result of a large ­combination of factors such as purer water, cleaner air, better food, better housing, immunisation and even more leisure.

But as you may expect, these ­factors don’t affect everyone equally. Just looking at two pieces of research highlights the point.

In June, the Office for National Statistics published data on regional life expectancies in the UK and the regional variation in probabilities of reaching age 75.

It showed that average life expectancy at birth in Kensington and Chelsea (at 84.4 years) exceeded that in Greater Glasgow and Clyde by more than 11 years.

The figure for just Glasgow City falls short of that for Kensington and Chelsea by 13 years. 

At age 65, the difference is 8.5 years: 23.7 years in Kensington and Chelsea compared to 15.2 in Greater Glasgow and Clyde. This is a 55% difference between best and worst. 

While the difference between the 10th best and 10th worst shrinks to just more than three years (19.2 years in Surrey, compared to 16.1 in Belfast), the variations involved highlight the difficulties of ­planning for retirement in a world where ­individuals have assumed ­responsibility for the risks of investment, living longer and the uncertain costs that arise in retirement. 

In 2010, the Marmot Review published Fair Society, Healthy Lives, highlighting, among other things, that social inequality and health are linked and that people with university degrees have better health and longer lives than those without.

Coping with later retirement

It is easy to look at the big ­picture and lose the implication of the ­detail. The consideration is always an individual one and the more granular the data, the more ­individual uncertainty will be found.

Even once known factors are allowed for, there is still a degree of uncertainty about precisely how long an individual will live.

Averages count for very little at an ­individual level and the consequences of ­exceeding average life expectancy, as many will do, can be severe.

Retirement can encompass a ­period of up to 30 years in some cases. For many reading this article, that is longer than they have worked. The changes that can take place over this period are immense.