The Australian Bureau of Statistics (ABS) released its highest ever life expectancy estimates, stating males born now could expect to live 79.9 years, while females could expect to live 84.3 years.
The life expectancy of those currently aged around 65 years is even higher with males expected to live a further 19 years and females a further 22, according to the ABS.
The institute said this means males will need to fund, on average, a retirement of around 21 years, and females an average retirement of 24 years.
The Actuaries Institute estimates that one in three 65 year-olds will live past 90 and one in five will live past 95.
President of the Actuaries Institute John Newman said with rapid advances in medicine and the dramatic improvement in life expectancy, it is likely in future years that half of all healthy 65 year-olds will live past 100.
Mr Newman said it is important for retirees to consider whether their savings will fund these long retirement periods.
“Those relying purely on ABS averages are likely to run out of money, meaning they may face a significant portion of their retirement years in an uncomfortable financial situation,” he said.
The institute has held concerns regarding the risk of people outliving their retirement savings for considerable time.
Last year, the institute released the paper Australia’s Longevity Tsunami, what should we do? emphasising the need for urgent retirement policy reform in the face of Australia’s steep and continuing rise in life expectancies.
The institute supported changes in the May 2013 federal budget, which removed the inequitable tax treatment of deferred lifetime annuities and allowed them the same tax treatment as current income streams.
Mr Newman said the institute had made an important step in highlighting the urgent issue of longevity risk.
“We are focused on improving education on this issue to ensure future generations have a better chance of planning for their retirement adequately, and we also strongly recommend lifting the pension age in line with increases in life expectancies,” Mr Newman concluded.
