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Financial Considerations if you Live Longer than Expected

Life expectancy has been on the rise for decades and even though, in recent years, the statistics have remained quite static, thanks to ever-improving healthcare and technology, we can continue to expect it to increase. When planning for retirement, don’t forget to take into account the possibility that you might live longer than you expect and how you’ll cover any gaps in income.


This does not constitute advice and advice should be sought in all instances before acting on it.


Life expectancy always on the rise

Forty years ago, in 1980, life expectancy for a man was 70.6 years and 76.6 years for a woman. As of 2018, the average life expectancy was 84.9 years and 87 years for men and women, respectively.

According to the Office for National Statistics, boys born in 2018 can expect to live on average to 87.6 years and girls to 90.2 years old. In 25 years time (2043), those numbers will increase by 2.8 years for boys (90.4 years old) and by 2.4 years for girls (92.6 years old) for babies born that year.

With the current average retirement age of 66 for both men and women, that’s about 20 plus years that you’ll need to account for.

With the average retirement age set to increase to 67 by 2028, that still leaves about two decades of retirement you need to fund.

Something to keep in mind: these are only averages and you could very well end up living even longer than projected. Clearly, you need to build into your retirement plan the possibility of a very long life.


Knowing that you’ll likely have a long, happy life ahead of you, what do you need to factor in when planning for your retirement?

The first step is always to figure out what kind of lifestyle you’d like to lead when you retire so that you can build your magic annual number around that. If you’d like to live comfortably you’ll need to save less than if you’d like to pursue an extravagant lifestyle – it’s all a matter of what luxuries you want to indulge in.

Working out your annual desired income will help you determine how big of a gap is left after pensions so you can plan accordingly.



What expenses should you consider?

There are the obvious expenses – house payments, insurance, transport, utilities, household goods, clothes, etc. Add in some luxuries like holidays, hobbies, and the occasional big purchase for bigger spenders.

But as you get deeper into retirement, your priorities will shift and you’ll need to include enough money to cover things like:

  • Care home costs
  • Possible renovations to make your home more accommodating
  • Contingency funds for emergencies.

Have a backup plan

Of course, if you had the foresight to secure a wealth protection plan like income protection or critical illness cover and your policy allowed payouts in retirement, you’d have a little extra cushion. But in the event that you never need to make a claim on your policies, you should have other options.

Make sure you have other assets — like property or shares — that you’d be able to cash in to get you through any unexpected events.


Start planning for a long and happy retirement

A financial adviser can help you plan for retirement at any point in your career – whether you’re just starting out or getting a late start on saving. Working with a team that knows all about the medical and dental industries ensures your financial plan is catered especially to your needs and circumstances. Get in touch to start planning for the future, today.


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Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
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