Why falling healthy life expectancy could reshape your retirement plans

The latest healthy life expectancy data makes for a very sobering read and has major implications for our retirement planning. We’ve seen our life expectancy increase over the years, but living longer doesn’t mean we’re living healthier.

Data from the Office for National Statistics shows healthy life expectancy has plummeted. In 2022-24, men in the UK can expect to spend 60.7 years in “good” general health. This compares to 60.9 years for women. Compared to 2019-21, this is a decrease of 1.8 and 2.5 years and is at the lowest level since the data were first collected in 2011-13.

There are huge differences across the country. Richmond upon Thames, for instance, has the highest healthy life expectancy across both men (69.3 years) and women (70.3 years). Compare this to Blackpool which has the lowest at 50.9 and 51.8 years, respectively. It’s an enormous difference of almost two decades.

This has massive potential issues for your retirement planning. Poor health can impact our ability to keep working, and that means it gets that much harder to build up a pension. It puts people in the sticky position of building a smaller pension because their working lives are shorter, but needing it to last longer because they may have to leave work early.

Read more: Why you should start contributing to your partner’s pension if you can

Added to this is the issue with the state pension. The state pension age will soon be making its way up to age 67. It forms the very backbone of people’s retirement income and yet there will be many who will have a gap of several years between potentially having to leave work and claiming this benefit. How do they make up the gap?

These will be big issues for the government, with a review into the state pension age ongoing. The issue of healthy life expectancy will be key in any discussions around whether the state pension age needs to rise further. It also shows the huge importance of offering flexible working arrangements, or re-training, to those who may still be able to keep working in some capacity.

Auto-enrolment will play a huge role in boosting people’s pension adequacy over time. The fact that individuals are enrolled into a workplace pension from the age of 22 enables them to build a pension that will give them some level of resilience in retirement. Wherever possible, people should try and boost contributions as and when they can afford it – for instance, when they get a pay rise.

It also shows the huge importance of building savings over and above pensions, if you can. It might be the case that you need to leave or make big modifications to your working life at an age where you are unable to access your pension. In this case, having money in ISAs and savings accounts will be hugely important in giving you something else to draw from.