In the UK, we are living longer. The latest Office for National Statistics (ONS) figures state that UK life expectancy at birth is 79.4 years for males and just over 83 years for females.
With increased life expectancy comes a higher chance of living to age 100. In fact, a woman aged 50 today has a 1 in 10 chance of reaching age 99, and a 7% chance of making it to 100. The chances of becoming a centenarian rise to 8.8% for a 40-year-old woman.
Planning for a 100-year life – and a 40-year retirement – presents its own unique challenges. Thankfully, HA&W are on hand to help.
Here are some points to consider.
Think about the lifestyle you want to live
When you are planning for retirement, you need to think about your dream lifestyle post-work.
After a lengthy career, you might be ready for a clean break. Maybe you have plans for world travel? A recent Royal London report looked at the plans of over-55s as coronavirus restrictions lift. It found that nearly two-thirds (64%) planned to head overseas, with a trip to see the Northern Lights the most popular destination.
You’ll need to factor in the cost of this lifestyle and decide how long you might travel for. This is especially important if you need to plan a retirement budget well into your eighties or nineties.
You might not be in a rush to give up work entirely.
The days when the only choice was a cliff-edge retirement – working full-time one day and being fully retired the next – are long gone. If work is a fulfilling and important part of your life you might not want to give it up if you don’t need to. The thought of 40 years without the focus of work might even be scary.
Phased retirement or a move into a consultancy role could allow you to continue working for longer, earning money to supplement your retirement income while enjoying the social and active side of remaining in work.
It’s also important to remember that your plans don’t need to be set in stone. Priorities can change and something that seems vitally important to you now could become less so as you move through retirement.
Your expenditure in retirement won’t be static
The early, active years after finishing work could be the most expensive. During these years you might travel or make home renovations before settling into later retirement.
In later life, new costs, like that for care, could increase your expenditure again. Figures published by Age Watch suggests that although we’re living longer, that could also translate to more years lived in ill health. The report concludes that on average, a man’s later life will comprise 16 years of ill health and 19 years for women.
Managing your pension income to allow you to live your chosen lifestyle while you are still able, and to ensure you can cover the potential costs in later life, is a difficult balancing act.
At HA&W we can take all your income and expenditure into account – as well as your ideal retirement – to build a plan that works for you.
This might mean mixing a regular income, with flexible withdrawals and tax-free cash, as well as considering other income such as the State Pension and money from buy-to-let properties for example. A long-term plan will also need to factor in external factors like investment performance and the effects of inflation. We can help here too.
Thinking about the next generation
The ONS expects that improved working conditions, reduced smoking rates, and better healthcare will mean that life expectancies will continue to rise. According to their latest calculators, almost one in five (18.8%) girls born today will live to age 100.
The life lessons and financial help you can pass on will be invaluable to the next generations. You might opt for giving while living, taking advantage of gifting allowances to help pay into a grandchild’s pension or JISA.
You could also use your will to provide an inheritance, giving the next generation a great start from which to build their own wealth and to begin planning for their 100-year life.
Get in touch
The long-term financial plan we help you put in place will cover all contingencies, including a 40-year retirement.
By covering all the bases – ensuring you have enough money while planning for what will happen to any excess you don’t use – gives you the best chance of living your dream lifestyle for the whole of your retirement. It will also help you to look after loved ones once you are gone.
Please contact us to find out what our Chartered Financial Planners can do for you, or to book in your regular review.
Please note
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
