Australians need to prepare for at least two decades in retirement in view of the Australian Bureau of Statistics' (ABS) projected increased life expectancy, the Actuaries Institute has warned.
The Institute said men over 65 now will need to prepare for 21 years of retirement and women will need to prepare for 24 years of retirement.
The ABS projected life expectancy at birth age for men of 79.9 and 84.3 for women.
But the Institute predicts those who are already 65 can expect to live longer, as longevity improves. It said the average life expectancy for men aged 65 will be 86 while it is 89 for women.
The Institute predicts one in three current 65-year-olds will live past 90 and one in five will live past 95, meaning some will need to prepare for three decades in retirement.
"Most people don't realise how long they might live," president of the Institute John Newman said.
"With rapid advances in medicine and the dramatic improvement in life expectancy, it is quite conceivable that in the coming years half of all healthy 65-year-olds will live past 100."
The Institute warned those relying solely on the ABS life expectancy projections risk running out of money and may find themselves in an "uncomfortable financial situation" during retirement.
The Institute released a white paper in September 2012, which emphasised the need for urgent retirement policy reform as life expectancy increases.
Since launching the paper ‘Australia's Longevity Tsunami, what should we do?' and engaging in government consultations, the Institute welcomed changes in the May 2013 Federal budget, which removed inequitable tax treatment of deferred lifetime annuities and allowed them the same tax treatment as current income streams.
