Now there is a strange thought…live too long? Well, when it comes to retirement planning it is a very real question. What if you are basing your retirement plan on the average life expectancy with little to no room for contingency? Even exceeding your expectations by a few years could leave you financially stuck, at a time when you need it most. What is the best guidance here?
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it.
Longevity for future generations
Whilst most people reaching retirement now won’t live to be a centennial, the younger generation stand a much higher chance. Figures show that up to two in three babies born now, in the UK, are now expected to reach their 100th birthday*. Therefore, longevity is certainly on the cards for the generations of tomorrow.
Babies that were born in 2012-2014 *, are expected, on average, to live to between 75 and 80 years for boys, and between 80 and 87 years for girls. Geographical factors accounted for the variance.
This is wonderful in terms of health and life fulfilment, however when it comes to retirement, it could be a ticking time bomb, financially, if people are unprepared.
*Office for National Statistics
Do you base your own life expectancy on the average?
Many people when considering their retirement, base their decisions on the average life expectancy and don’t take into account the “what if” scenario of living beyond the average age.
This is even more so now with the new Pension Freedoms, as pension holders that reach 55 can withdraw their funds for their own use.
It is encouraged by financial advisers and pension providers to spend carefully and always ensure that there is enough to see you through retirement.
However, even those following the guidelines of careful spending are at risk if they are basing their spending on the average life expectancy. If they exceed their “plan” to live to 80 years old and then live to 90, they could find themselves in a position where the pot has ran dry.
Retirement planning with contingency
When it comes to creating a solid retirement plan, there are many variables.
- Life expectancy average but also family history
- Wealth held in assets, that could be realised to support a retirement plan if needed
- Family connections to act as a contingency
- Desire to pass down assets or wealth to the next generation
Whatever the plan, it is essential to build a safety net to ensure you won’t fall short of money in the years when you are likely to need it most.
When making your retirement plans, don’t sell yourself short on your own life expectancy! Always plan to have at least enough to cover the BEST case situation.
Need help with retirement planning? Speak to Darren
Dental & Medical Financial Services have been helping doctors and dentists with retirement planning for over 25 years. Make sure you can have the retirement you deserve.
Tel: 01403 780 770
Follow us for regular updates:
?