After reaching the retirement age of 65, a woman lives on average another 24 years, a man around 21 years. Some people live considerably longer, others die earlier.
If you draw a retirement pension, you receive a pension from the pension fund guaranteed until the end of your life. The pension fund thus takes on the so-called longevity risk for you. If you draw your retirement assets as a lump sum instead, you yourself are responsible for ensuring that your assets last for your living costs until the end of your life.
The average life expectancy is not of great importance for the individual, as the actual lifespan can turn out longer or shorter. The probability of reaching the age of 90 is 40% for women and 26% for men. 14% of women and 7% of men still reach their 95th year.
Conversely, someone may die earlier than statistically expected. Some pension funds take this risk into account and pay the surviving dependants a one-off death benefit capital if a person drawing a pension dies early. There is, however, no legal entitlement to this.
It is natural to think about your own life expectancy and to compare it with the statistical life expectancy. If you assume you will live longer than average, a closer look at the so-called longevity risk is worthwhile. If, on the other hand, you expect a below-average life expectancy, the retirement pension and the longevity protection that comes with it may be personally less attractive for you.
Many factors influence individual life expectancy. Besides gender, these include for example state of health, marital status or personal lifestyle. How much time we actually have left, however, is by its nature very hard to predict.