Can Your Financial Plan Survive Until Age 100?

Financial Planning

4 Mar

**ONS Life Expectancy Calculator - see ONS website.**

Life-span

When we design a client’s financial plan, we typically use a mortality age of 100 which is often greeted with a wry smile.

This is why I love using the Office for National Statistics (ONS) Life Expectancy Calculator – A client was recently shocked (in a good way!) to find out that she has a one in four chance of living to age 95! See the diagram above and visit Life expectancy calculator - Office for National Statistics.

Depending on which side of the fence you sit on, this can be viewed as either an opportunity or a curse - bear in mind that optimists live longer than pessimists!

A Great Opportunity

I like to see it as a great opportunity to do all of the things you want to do with the time you have left.

But there are some key issues to consider.

To really enjoy retirement, it is important to plan ahead and to consider what your ideal lifestyle might look like.

Does this involve more travel, several holidays a year or even a holiday home?
Does this involve taking up hobbies, volunteering in the local community or spending more time with friends and family?
Does this involve more socialising, more theatre trips and meals out?

If you are going to live a long retirement, it makes sense to make the most of it, especially in the first decade or two when you have more energy and, perhaps, better health.

Financial Plan

However, let’s say you have designed your ideal lifestyle in retirement, you need to watch for things that can throw you off course.

You need to have accumulated sufficient capital to be able to fund your retirement and this is where a financial plan is crucially important.
It is important to recognise that a financial plan not only shows you whether you are spending too much but, more importantly, whether you are spending too little - there is no point in getting to the end of your life with millions in the bank regretting not taking the holiday of a lifetime or helping the children financially.

Health-Span

Perhaps a crucial element of retirement that is often overlooked is health-span and this is where the statistics are troubling.

According to the ONS, in 2021 to 2023, males in England could expect to spend 61.5 years of their lives in good health, compared with 60.3 years in Wales; for females, it was 61.9 years in England and 59.6 years in Wales.

So, you’ve designed your ideal lifestyle in retirement and you have the money to be able to afford it, but do you have the health to be able to live it?

Recent research suggests that our longevity is 20% determined by our genetics and 80% determined by our lifestyle.

The good news is that our lifestyle is under our control and is influenced by factors such as our friendship groups, our eating and exercise habits as well as our stress levels.

A successful retirement is about designing your ideal lifestyle, whatever that might look like.

It is then about determining whether you can afford it and then making sure you are healthy enough to actually enjoy it!