Life expectancy has stopped increasing according to a report from the Office for National Statistics (ONS) issued in September, but we are still living longer than ever before.

Between 2000 and 2010, average life expectancy at age 65 rose by 2.4 years for men and by 1.8 years for women. However, since 2010 improvements have slowed markedly and the latest figures from the ONS show that, on average, a man aged 65 in 2015-2017 could expect to live for another 18.6 years, while a woman aged 65 could survive for a further 20.9 years.

The important word here is ‘average’. Calculations by the ONS suggest that at age 65 there is a one-in-four chance of a man living for another 29 years, to 94, and a woman living another 31 years, to 96.

The annuity option

Investing in an annuity is the only way to guarantee income for however long you live, but they have recently fallen out of favour. The latest FCA figures suggest over five times as much money is placed in income drawdown as annuities, despite drawdown’s greater complexities.

The important role of annuities in providing secure income is in danger of being ignored. Annuity income can be structured in a variety of ways, building in automatic increases – for instance in line with inflation – minimum payment terms and/or continuing until the second death of you and your partner.

If you would like more information on annuities, perhaps to provide a core level of retirement income alongside drawdown, please talk to us. We can supply guidance based on your health and lifestyle circumstances.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.