Are you financially ready to live to 100? Two ways to prepare for a long retirement

The average life expectancy in the UK has steadily increased over the last couple of centuries thanks to medical advancements, improved living conditions, and a greater awareness of healthy lifestyles.

Data published by Statista shows that the average life expectancy at birth in 1825 was just over 40 years. In comparison, the Office for National Statistics (ONS) life expectancy calculator estimates that a male child born today could expect to live to 87 years on average, and a female child’s average life expectancy is even higher, at 90 years.

Moreover, the latest ONS figures reveal that the number of people living to 100 (centenarians) doubled from 8,300 in 2004 to 16,600 in 2024.

Whilst living longer is a blessing, it requires careful financial planning, as your retirement savings may need to stretch further than you expected.

Read on to learn about the potential costs you could face when you leave work behind. Then, find out how to save enough for a retirement that could last 30 years or more and discover useful tips to make your funds last.

The potential costs you could face in retirement and how these might change over time

The first step towards preparing financially for your retirement is to understand what your income needs are likely to be.

According to Pensions UK’s Retirement Living Standards, a single person needs around £43,900 for a “comfortable” lifestyle that allows for non-essentials such as UK weekends away and social activities. This rises to £60,600 for a couple.

If you retire at 55 (typically the earliest you can access private pensions in 2025) and live to 100, you’d need to cover these costs for 45 years. What’s more, prices typically rise over time due to inflation, which could increase your daily expenses whilst reducing the purchasing power of your savings and fixed incomes (such as non-indexed annuities).

As such, you may need to withdraw more from your pension pot or other investments to cover rising costs, which could deplete your retirement fund more quickly than you expected.

It’s also important to consider your specific needs and goals, and how these might change throughout your retirement.

For example, if you have big plans for the early stages of your retirement, such as extensive travel or funding your children’s weddings, you might need a higher income than that estimated above.

Moreover, the longer you live, the more likely it is that you could need medical support or professional care. The most recent ONS data shows that in 2021, 82.1% of all care home residents were aged 65 or over.

So, if you want to ensure you can live comfortably throughout your retirement – no matter how long it lasts – careful financial planning is crucial.

Learn more about our retirement planning support.

Two practical ways to save for a long retirement

Now that you understand the potential costs involved, here are two ways you could bolster your retirement savings:

1. Maximise your pension contributions

Standard Life’s Retirement Voice 2025 report reveals that 45% of employees with a defined contribution (DC) pension believe automatic enrolment means they’re saving enough for retirement.

However, unless you have actively chosen your investments, your money will be invested in the pension scheme’s default fund. This is a one-size-fits-most approach, and as such, it may not meet your specific needs and goals.

So, it’s worth reviewing your pension contributions and considering if you can afford to pay more than the minimum amount. Even small, incremental increases to your monthly pension contributions could make a significant difference to your final pension pot.

What’s more, in 2025/26 you can receive Government tax relief on your own and any third party contributions and your employer receives tax relief on their contributions. There is a cap on the amount of tax-efficient contributions you (and others on your behalf) can make – known as the Annual Allowance.

Your Annual Allowance usually stands at £60,000but may be tapered down if your income exceeds certain thresholds or you have already flexibly accessed your pension. It can be increased, if you have unused annual allowance to carry forward from the previous three tax years.

Bear in mind that your own contributions receive tax relief as long as they don’t exceed your annual earnings (or £3,600).

2. Claim tax relief on your pension as a higher earner

The 20% basic rate of tax relief is usually paid automatically on top of contributions. This means that for every £80 you contribute, £100 is paid into your pension.

However, if you’re a higher-rate or additional-rate taxpayer, you could claim an additional 20% or 25% tax relief, respectively. This may provide a major boost to your retirement savings.

Indeed, if you claim a total of 40% relief as a higher-rate taxpayer (20% basic rate, plus an extra 20%), £10,000 of pension contributions could cost as little as £6,000. For an additional-rate taxpayer claiming a total of 45% relief, £10,000 of contributions could cost as little as £5,500. The gross contribution must be matched by income taxed at that rate, for full additional or higher rate relief to be available.

Your additional tax relief will not usually be paid automatically. Instead, you’ll need to apply for it through a self-assessment tax return or by contacting HMRC directly.

Read more: Four common retirement regrets and how to avoid them

How to make your savings last for your whole retirement

Of course, no matter how much you save, it’s impossible to predict whether you’ll live to 85, 90, 100, or older. So, it’s important to make your hard-earned savings stretch as far as possible. Here are a few strategies to consider:

Plan for a more moderate retirement

According to the Retirement Living Standards, a “moderate” retirement lifestyle costs a single person £31,700 and a couple £43,900. This is considerably less than the amounts quoted previously for a “comfortable” lifestyle.

Be realistic about what you can afford if your retirement lasts 30 or 40 years, then review and prioritise your goals.

Consider downsizing to a smaller home

Moving from a large property to a smaller one could unlock equity and boost your retirement funds. You’re also likely to reduce running costs, such as heating and council tax, which could make your day-to-day expenses more manageable.

Buy an annuity

You could use some or all of your pension savings to buy an annuity that offers a guaranteed income for the rest of your life or for a fixed period, depending on the product you choose.

However, this option isn’t suitable for everyone, so it’s essential you speak to a Financial Planner who can help you make an informed decision.

Find out how we can help you build the wealth you need for a long and comfortable retirement.

Get in touch

Email us at enquiries@pen-life.co.uk, or call 01904 661140.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Workplace pensions are regulated by The Pensions Regulator.

The Financial Conduct Authority does not regulate cashflow planning or tax planning.