pension pot 

The over-50s are “sleepwalking” towards their retirement by underestimating how long they will live for and being overly optimistic about how well off they will be, research by pensions experts warns.

A report by the Institute for Fiscal Studies (IFS) said savers with a defined contribution (DC) pension typically appear to be “somewhat optimistic”, and some would have to grow their pension pot by almost 80 per cent to meet their retirement expectations.

The research, backed by the National Association of Pension Funds (NAPF), found that one in four people aged 50 to 64 would need to save more than £60,000 before they retire to achieve the income they expect, and almost two thirds (59 per cent) had never considered how many years of retirement they might need to finance.

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Meanwhile, a third (32 per cent) of private pension holders aged 52 to 64 could not even give a rough estimate of what their pension income in retirement might be.

The report said that women aged in their 50s are underestimating their life expectancy by around four years on average compared with national projections, by putting it at around 84 rather than 88.

The study of older people in England also found that men tend to think they will live to be around 83, whereas according to national forecasts they are likely to live to be 85.

Joanne Segars, chief executive of the NAPF, said: “The average saver with a defined contribution pension is being over-optimistic.

“They need to see their pension pot grow by almost 80 per cent to meet their expectations. That is a huge ask if they are only a few years away from their retirement party.”

She added: “Fortunately, people are going to live longer than they think, but they are not planning for it, so they might find their savings and pension do not stretch far enough.

“It’s worrying that so many over-50s are sleepwalking into their old age and are expecting to be better off than they will be.”