Which generation are most vulnerable to later life income risks?

Its data shows that millions of Generation X pension savers will reach retirement lacking a realistic grasp of how long those savings might need to last.

Men aged 40-54 expected to live on average to age 78.6 whereas government projections suggest it is likely to be closer to 87.5. Women of the same age expected to live to age 80.5 whereas the projections show it is likely to be closer to 90.1.

Just Group noted that Generation X are caught in the middle between the Baby Boomers, of whom many enjoyed steady jobs and have guaranteed pension income from defined benefit pensions, and the Millennials who will have many more years of auto-enrolment to build up a decent pension fund.

Stephen Lowe, group communications director at Just Group, said: “The combination of easy access to pension cash and underestimating life expectancy could have some toxic consequences.

“Nearly a million members of Generation X are set to arrive at age 55 every year for the next decade or so and will face crucial decisions about whether to take pension money or leave it to keep growing. Without a realistic idea of how long they will need that pension fund to last, it will be very difficult to make an informed decision.

“With the amount of money now being accessed from pension funds before State retirement age, particularly modest ones that could grow to a decent size given extra contributions and a bit more time, many people already seem to be making decisions their older selves are going to regret.

“You can understand the temptation of taking cash out of the pension but each pound taken early on might mean perhaps two pounds less a few years later when money is tighter. As it stands this generation is almost certainly going to need to work to greater ages than before, but that depends on the jobs being available and them being healthy enough.

“The timing is not all bad for them because they have ridden the property price rises and it is likely some of that equity built up will need to be extracted later – through downsizing or equity release – to help pay the household bills or bigger sums to finance care costs.

“Longevity is unique in that it depends on a multitude of factors such as your own genes, health and lifestyle. Before taking pension money, people need to get more informed by taking the free and impartial government guidance from Pension Wise or seeking professional advice because bad decisions early on can have a huge effect on how comfortable you are in later retirement.”