3 sensible ways to prepare for a 100-year life, and how a financial planner in Worcester can help
As the quality of healthcare continually improves, both in terms of preventative and reactive medicine, life expectancies are gradually increasing. That means your chances of living to be 100 are better than ever before.
According to the Office for National Statistics (ONS), there were 13,924 centenarians living in England and Wales at the time of the last census in 2021. Meanwhile, an ONS calculator shows that 1 in 3 of today’s babies can expect to live to 100.
This presents a particular challenge to planning your wealth, as living to 100 means more years in later life to pay for after you stop working.
For example, the State Pension Age is 66 in 2023/24, set to rise to 67 by 2028. Assuming you retire at this age, that would mean your wealth would need to last for more than 30 years after you stop working – and the ONS calculator suggests that there’s a 1 in 10 chance of someone at that age now living to be 99.
As a result, it seems to be practical to prepare for the possibility that you could live to be a centenarian yourself.
So, read on to discover three sensible steps for planning for a 100-year life, and how working with a financial planner in Worcester can help you to organise your wealth for the potential of your own century.
1. Start saving now for later life
The most obvious and easiest step to take is to start saving now for later life. Whether you’ve progressed in your career and now have an eye on retirement, or you’re still early on in your working life, it’s never too soon to start saving for retirement.
You have multiple options for creating a retirement savings pot, including:
- Contributing to a pension, where you can also benefit from tax relief and potential investment returns
- Investing in assets such as stocks and shares, bonds, and more to grow your wealth in the markets
- Putting money in a savings account to generate interest.
If you’re yet to make the most of any of these avenues for saving and investing, there’s no time like the present.
In fact, there are several reasons why it’s arguably better to start planning sooner rather than later. By setting money aside for the future with years left in your career, you can ensure that you’re able to contribute as much as possible to your pension, investments, and savings.
Furthermore, you’ll give your invested wealth more time in the market to potentially grow. You’ll also give your savings longer to generate interest. In turn, this offers a greater time frame for this money to compound, which sees you receive growth on growth.
2. Carefully plan how much your later years could cost
It’s worth creating a meticulous plan so you can calculate how much your later years could cost – especially if you live to be 100.
Your retirement has a tangible cost, depending on how you want to spend your time. You might want to go on multiple holidays a year or travel around the world. Or you might have ambitions closer to home, such as spending time with family or even starting a new business.
Either way, it’s possible to roughly work out what you’ll need to afford your personal ambitions. Once you’ve done this, you can then factor in outside influences, including inflation and investment returns among other aspects, to figure out what you’d need to afford your desired lifestyle.
With the goal of having money to live to 100, it’s also worth thinking about how your costs could vary throughout your retired years.
In your early years of retirement, you might find that your expenditure will be greater, as you use your wealth to achieve your goals.
But, you might then envisage that your costs will go down as you get older and find yourself doing less. You may also forecast a subsequent rise in expenses as you enter your 80s and 90s if you think you may need long-term care in later life as your health could decline.
Again, this all has a tangible cost. Factoring this into your plan can accurately help you predict how much your later years could cost.
3. Look at what you need to do now to ensure your wealth can last a century
With money set aside and an idea of what you want to do, you can then start to consider whether you have enough to live your desired lifestyle – and crucially, whether you might run out of money if you were to live to 100.
Firstly, if your calculations currently suggest that you’re facing a shortfall, you could look at increasing how much you’re setting aside to ensure you have enough to reach your goals and afford your lifestyle if you do live to 100.
Additionally, you may also want to consider ways you can create a guaranteed income so that you’ll always have money coming in during retirement. For example, you may want to consider how you’d use the income from a defined benefit (DB) pension scheme if you are enrolled in one.
Or, you might want to check that you’re entitled to the full State Pension, as this will pay a guaranteed income for the rest of your life.
There’s plenty you can do to ensure that your wealth will last a century – the key is to start making these considerations now before it’s too late.
A financial planner can help you forecast what a 100-year life could cost
Perhaps the most sensible way to ensure that you’d be able to afford a 100-year life is to work with a financial planner.
A planner can use sophisticated cashflow modelling software to forecast how much your retirement will cost, based on what you want to do, how much you’ll have, and important external factors such as inflation.
Crucially, a planner can make personalised recommendations to cover a potential shortfall, giving you the peace of mind that you’ll be financially secure for the rest of your life.
If you’d like to work with an experienced financial planner in Worcester, please do get in touch with us at Britannic Place.
As one of just three Chartered firms in the whole of Worcester, we’re well-positioned to help you achieve your goals for the future.
Email email@example.com or call 01905 419890 to speak to us.
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
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.
The Financial Conduct Authority does not regulate cashflow planning.