Q&A What if I live until I’m 100?

Paul McCabe of Acumen Financial PlanningPaul McCabe of Acumen Financial Planning
Paul McCabe of Acumen Financial Planning | Ross Johnston/Newsline media
Paul McCabe of Acumen Financial Planning answers this question: ‘More people are now living longer lives, even to the age of 100. If my retirement were to last 50 years, how much money would be enough and how long have I got to save?’

A Aegon has research, aptly named “The Second 50”, focusing on the issues and considerations with regards to many people living to the age of 100. The traditional cycle is: we become educated, then go to work, and then retire.

But, with an estimated 25 per cent of all children born today projected to live to almost 100, this is changing. When I talk with clients on planning for the biggest break from work, this involves questions and thoughts on goals and aspirations, rather than just the hard facts and financials.

When we present our financial modelling plans, that map out the projected income and expenditure for retirement, we always project to a minimum of age 99. I cannot tell you how many times clients have remarked “I don’t know why you are showing it until then, as there is no way I will make it to age 99”

.Clients will use their own health status, and their parents’ mortality, to provide their “best guess” on their situation. We challenge them, and ensure their plan is robust enough to endure different scenarios.

We are all living longer, and the financial constraints are there for all to see, with Aegon’s survey suggesting that 1.3 million UK citizens have caring responsibilities for both parents and children.

People are now working longer with the number of workers over the age of 65 doubling between 1998 and 2018. Of the people surveyed, only 27 per cent were planning a “clean break” from work, with the remainder saying they will work on, either to keep active or due to a lack of retirement savings.In terms of managing the journey from employment to retirement, the testing part of the conversation is the level of expenditure required and distinguishing between essential and lifestyle expenditure.

One would expect lifestyle and spending habits to change in retirement – an increase in travelling costs for example, although it is crucial to focus on realistic retirement expenditure levels.

Aegon suggests an annual income of 70 per cent of your pre-retirement income is an effective way to ensure a comfortable retirement. As we all have different aspirations and lifestyles, when it comes to pensions and retirement planning, it is recommended to seek out financial planning advice.

Whether planning for a retirement of 50 years or less, it is never too early to establish your own financial plan to ensure you are on track financially, have the “what if?” scenarios covered and know exactly how much you need to live the best retirement for you.

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