The 100-Year Life… And The Implications For Your Financial Planning

The latest Office of National Statistics ONS figures illustrate the increasing impact of longevity and how we need to take that into account in all aspects of our life and financial planning.

The so-called ‘100-year life’ is predicted to become almost the norm for those being born today and this is what made all the headlines. However more relevantly for us, women currently aged 65 in the UK in 2023 can expect to live another 22 and a half years. Men currently aged 65 in 2023 can expect to live nearly another 20 years. Remember this is the UK average, I would hazard a guess that those living in affluent parts of North West Bristol can expect to live longer than the average.

So what does all this mean? Pretty obviously it means that we have to plan our finances with these extended retirement years in mind. The drain on one's financial assets becomes obviously much greater when you include a projection of a much longer life. Basically, you need more money to sustain you for a much longer period.

What are the options? You can either save more, tax efficiently, in those earlier years of life, when you are building your financial resources with a view to living on those financial resources in retirement. Or perhaps working longer is an option for you and not drawing down on your financial assets as early – meaning its more likely that your financial assets are going to last until the end of your life.

Of course, the fact that you are having to draw down on your financial assets at all, will mean there's perhaps less to leave to the next generation. In a longer life, that means that the inheritance for your family is probably going to be less. So perhaps a relevant strategy might be to put in place arrangements that will produce a sum of money that will boost that inheritance on your death.

What does that job better than a life insurance taken out at the right time and made subject to a trust so that it's free of inheritance tax? This can boost (or create) an inheritance for your family in a cost effective and guaranteed way and enables you to draw down on your financial resources to fund the longer life (perhaps the ‘100-year life’?) you want and need.

Of course everyone is different, every situation is different. But with these increased longevity expectations comes a definite requirement to factor that into your financial planning.

Please get in touch for a complimentary financial planning review with our SOLLA accredited specialist later life financial advisers. Call 0117 3636 212 or email office@haroldstephens.co.uk to arrange a relaxed chat about your circumstances.