Pensions and demographic risks
Different demographics of the population experience different pension risks, depending on age, location and various other factors.
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Also, the fact that the UK population is getting older and living for longer could be viewed as a demographic risk in itself.
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As Jon Young, financial planner at WealthFlow, says: “Your pension pot has to last for longer and probably has to pay for a more active lifestyle in retirement than it did previously.”
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However, people might not be sufficiently aware of this, as Ryan Medlock, senior investment development and technical manager at Royal London, explains: “We know that on average, the majority of people tend to underestimate their life expectancy by five to 10 years. This, for example, could mean that some individuals don’t think their retirement income needs to last them as long as it actually does.”
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