Can Your Life Savings Last a Lifetime? TRADITIONAL RETIREMENT INCOME IS SHRINKING EVEN THOUGH WE'RE LIVING LONGER ... SO GET PLANNING NOW

Article excerpt

Byline: RICHARD DYSON

How long am I likely to live? And will my savings last the course?

These difficult questions are increasingly being asked by new generations as they approach retirement.

Many do not belong to those fast disappearing works pensions where employers guarantee to pay an income for however long it is needed. Nor can they rely on State pensions to provide adequate income.

'People are looking more to non traditional sources of funds to provide for retirement on top of whatever pensions they may have,' says Simon Fraser of investment firm Fidelity.

Fraser warns that everyone needs to be more informed about their level of savings - and how best to manage them - because we are living longer and because the traditional sources of pension income are falling away.

'The most important thing is to have a plan,' says Tom McPhail, pensions analyst with financial adviser Hargreaves Lansdown in Bristol.

'Most people don't or can't afford to rely solely on pensions. They are also having to turn to equity in their property, or Isas or other savings.' But how can you eke out those assets over what may be a very long time? According to Fidelity, a man aged 65 has a one-in-two chance of reaching 87 and a onein-four chance of getting to 92. A woman aged 65 has a one-in-two chance of reaching 90 and a onein-four chance of hitting 96.

And Fidelity's figures show how quickly a lump sum can diminish if pensioners draw too much income from it.

Fidelity's calculations show that an average sum, invested cautiously in a mix of bonds, cash and shares, would be entirely depleted in seven years if the pensioner withdrew ten per cent a year. …