Britain's savings gap is likely to widen even further as most people underestimate their life expectancy by more than half a decade, warns the Society of Financial Advisers.
According to research conducted by Sofa, the average UK worker underestimates his or her likely life expectancy by an average of 5.3 years.
This will potentially add another burden on the state as more people will fail to make sufficient pension provision, Sofa says.
Sofa managing director Bob Bullivant says: "It is a disaster quietly bubbling under, but it is timed to explode in years to come as today’s work force realises it has collectively short-changed itself in making appropriate provision for a long retirement.
"Our research will add significantly to the debate that the UK population is collectively falling way short of the mark when it comes to making appropriate pensions provision.
"Annuity rates are currently seen as poor value as the ups and downs of the stock market and historically low interest rates have taken their toll – but savers need to wake up to the fact that they are probably going to live much longer than they have anticipated and will have to build up bigger pension funds," he adds.
Sofa research indicates women are most likely to make miscalculations.
Men between the age of 25-34 believe they would live for 5.1 years less than estimated by current actuarial calculations. Women from the same age group make even worse under-estimates, missing the estimated age by 6.5 years.
The older women get, the more wrong they seem to be getting it, the survey says, revealing over 55s believe they would live on average seven years less than today’s actuarial predictions.
Men over the age of 55, on the other hand, only believe they would die 2.2 years before estimates, Sofa suggests.
"It is encouraging to think that we are living longer, but the challenge is to make the retirement years comfortable. By waking up to the fact that we have to make more provision today to fund tomorrow's extended leisure years, we can go some way towards offsetting financial compromise," Bullivant concludes.IFAonline
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