What living longer means for your finances

How long do you think you will live for?

Do you think you will live as long as your parents? As your grandparents? What are you basing your knowledge on? Your family medical history? Your own health? Where you live?

Or are you simply putting a finger in the air and saying this feels about right?

How long you think you will live for can be a thorny question. But the good news is that it’s probably longer than you think. And life expectancy is still one area where women outperform men.

New estimates from the Office of National Statistics (ONS) show that a girl born in 2023 is expected to live to an average of 82.8 years, four years later than a boy born the same year.

And a 65-year-old woman in 2023 can expect to live for another 21 years, compared to 18.5 years for the same aged man.

This is good news. After many years of showing a steady incline, life expectancy took a step back in recent years due to the effects of the pandemic, and these are the first estimates showing an increase again.

More of us are living for longer as well. In 2023 there were over 16,000 centenarians — double the number there were 20 years ago. And the vast majority — over 80% — of these were women. Although men are catching up quickly and closing that gap. In 2003, 10% of centenarians were men and now 18% are.

Where you live has a lot to do with how long you can expect to live for, as it’s such a powerful indicator of available health facilities, quality of diet, and general standard of living.

In 2023, the ten highest female life expectancies were all located in the south of England, and the ten lowest were mostly in Scotland. The highest was Kensington and Chelsea at 86.5 years, a massive eight years longer than someone born in Glasgow City.

Source: ONS, Life expectancy for local areas of Great Britain, 2021-23, life expectancy at birth.

So why does your life expectancy matter? Well, you have to make sure you have enough income to live on for the rest of your life, however long you may live for. Your state pension will continue to pay out until you die, but you will also want to make sure your other finances will continue to top it up to the amount you need to live comfortably.

But many of us underestimate how long we will live for. For example, Institute of Financial Services (IFS) research in 2018 found people of all ages misjudge their chances of surviving well into older age. When they asked 65-year-old women, 65% of them guessed they would live to age 75, when in fact (at that time) the official estimate was 89%.

If we underestimate how long we will live for, then we may get our vital financial calculations wrong, thinking we need our money to last for a shorter period than the reality.

And remember, if you are part of a couple approaching retirement, you need to think about how long each of the couple will live for. For example, in a couple with a female and a male, if the woman is a three years younger than the man, then on average you could expect her to live for another five or six years after he has died. So joint finances need to take that into account and make sure they stretch to cover her final years.

If you want some help working out how long you could live for, check out this helpful calculator on the ONS website. As well as giving your average life expectancy it can work out your chances of living to, say, 100. But remember your own personal circumstances are important as well.

Talking about mortality and death is never pleasant. But facing up to how to fund your later years is important. The chances are you will live well into your 80s, so make sure you have the money to enjoy it.