Survival expectations can make annuities seem a 'bad deal' - IFS

'People underestimate chances to survive to 75'

Tom Ellis
clock • 1 min read

People's expectations of how long they will survive can make annuities seem like they are a bad deal, the Institute for Fiscal Studies (IFS) has said.

The research institute found people from a range of ages underestimates their chances of survival to ages 75, 80 and 85. More specifically, the IFS said, those in their 50s underestimate their chances of survival to age 75 by around 20 percentage points and to 85 by almost 10 percentage points. In contrast, older retirees - those in their late 70s and 80s - are, on average, "mildly optimistic" about surviving to ages 90, 95 and above. However, the IFS said survival pessimism is a "potential driver" of the unpopularity of annuities and, based on people's expectations of survival, it calcu...

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