Over-50s ‘risk running out of retirement income’

Over-50s could be putting themselves at risk of running out of money in retirement by underestimating how long they will live, according to a report.

Retirement Advantage claims a combination of the introduction of pension freedoms in 2015 with people living longer has created potential for many to experience a pension deficit later in life.

The freedoms allow over-55s to take their entire pension pot as a lump sum, with the first 25% tax-free and the rest taxed as if it were income.

Retirement Advantage warns that many of the 1,005 workers aged between 50 and 64 will be left without sufficient income if they underestimate their years in retirement.

78% of those polled underestimated their own life expectancy, with the average guess standing at 82.

In fact, someone aged between 50 and 64 can expect to live to 88 if they are a man or 90 if they are a woman.

Andrew Tully, pensions technical director at Retirement Advantage, said:

"Pension freedoms have given people the opportunity to plunder pension pots early, often before planned retirement ages.

"This is potentially storing up trouble for the future, especially if people are underestimating how long these pensions need to last in retirement."

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