Almost eight out of ten (78%) over-50s significantly underestimate how long they are likely to live, leading to concerns that many currently taking advantage of pensions freedoms may well run out of cash in retirement.

A study carried out by Retirement Advantage has highlighted the particular dangers of pension freedoms for those who have raided their pension pots ahead of retirement.

Both men and women aged 50-64 on average guessed their life expectancy to be 82 years. However, according to the latest official statistics, the average 50 to 64-year-old man is likely to live until 88, while his female counterpart is expected to live until 90.

Retirement Advantage says the findings suggest consumers should get financial advice to help them make realistic projections of the pension funds they need for retirement.

Andrew Tully, pensions technical director at Retirement Advantage says: Planning for retirement can be a complicated business and no one knows how long they will actually live.

The 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.

It’s important to remember these are averages and so the numbers mask significant differences, for example from male to female and area to area across the UK. However, there are tools available which can help people consider the probability of living to older ages.

This is an area where proper financial advice is key. An adviser can make a plan for the personal retirement journey which considers all the risks at play whether that be investment risk, or the risk of living longer than people may have expected.

Hopefully you will not be one of those at risk, but if you feel you may be then you can try different scenarios in RetireEasy LifePlan Premium to see what effect this may have on your retirement finances. If you currently have Basic or Classic LifePlans, then login and go to your dashboard; click Upgrade my account; select Upgrade to Premium and follow the prompts. Premium costs just £3.99 per month.

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