My father died last year aged 82. In contrast, his father died in his early 60s. Modern medicine has come on leaps and bounds and was able to provide treatment for my father’s heart condition but not for my grandfather. So I ponder, given my father outlived his father by 20 years and the continued progress in healthcare and my relatively healthy lifestyle, could I live to 100 or beyond? If I do what impact does that have on my life plans and how might I finance them?
I don’t think you really consider your own mortality until you lose a parent and few of us will have considered that we could reach 100 but the number of people that do is rising rapidly. People over 90 are the fastest growing segment of the population in the UK. I have to face facts that actually I could realistically live as long in semi or full retirement, as I have I my working life. Maybe 30 years.
Many in the UK are now part of a sandwich generation where they have aged parents and children to support.
Many in the UK are now part of a sandwich generation where they have aged parents and children to support. I have a good company pension scheme and I have saved into stocks and shares ISAs. Like many people I have mortgage debt and two children so it’s unlikely that I will meet Shakespeare’s advice anytime soon “Neither a borrower or a lender be.” A longer lifespan and changing family demographics necessitates an adviser who can cover all the bases. I think that will be increasingly where a Society of Later Life Advisers (SOLLA) accredited advisers can really add value. I know of several organisations that are using SOLLA to train their advisers.
Retirement has become a complicated business. Not only have we added choice from a pensions perspective but there are also broader issues around matters such as power of attorney, housing, social care, wills and Inheritance tax planning. Yes these specialist areas of expertise could be outsourced but consumers may prefer to have a joined up approach with services provided under one roof. Many consumers are grappling with their parent’s needs as well as their own as I can testify. As well as thinking about my own financial future, I have just completed a power of attorney for my mother. This comes in two parts covering both her health and finances.
Just in case I reach 100, I have penned a note to myself on my top tips for things to consider.
Top tips for healthy finances as you head to 100
Until I worked in Finance, I don’t think I would have understood the value that an adviser could add. One of my priorities is that I’m going to continue to use a financial adviser in the long term. If I’m going to live to 100 I’m definitely going to need one. Mental capacity declines sharply with age so I’m going to need an adviser to hold my hand through it all. I intend to use a Society of Later Life Adviser (SOLLA) . Advisers with the SOLLA accreditation have expertise in advising people on specific later life issues e.g. power of attorney, housing etc. You can find a list of SOLLA accredited advisers through unbiased.co.uk by simply entering your postcode.
Save as much as you can for as long as you can
I hold enough money in cash to cover my basic lifestyle plus a contingency, if I have anything left over, even if it’s only a small amount, I invest it. For me saving as much as you can afford in stockmarket based investments, even if it’s just small amounts, and saving over the very long term is the key to building wealth. In retirement, you can continue to contribute up to £4,000 a year to a pension even when you are taking income from it.
Prepare a budget
Outstanding on my list of things to do is to prepare a budget to keep track of my monthly spending. I haven’t done that for a while but it’s a great discipline to have as it highlights immediately areas where I can reduce spending to be able to save more. If I’m going to live to 100, I will need to save as much as possible. Without a budget I can’t do the sums to show how much I am spending each month and importantly how I can divide my money into pots.
Divide the money you have into pots
Dividing your money into pots makes thinking about what you need easier. My first pot is for money that I use to cover my monthly bills and other expenses; I call this short term money. My short term money is in cash in my bank account. My next pot is to fund discretionary spend e.g. my children’s sports activities, go out with my family and friends and the annual holiday. My third pot is money I don’t need access to in the medium to long-term 3 years plus. By dividing money into pots it’s easier to avoid the pitfall of holding too much money in cash which with rising inflation and low interest rates is a toxic combination.
Think about the life that you want to lead in retirement
The Department of Work and Pensions did some research in 2011 which estimated that to fund a basic lifestyle with no car would cost £12,000 and to fund a comfortable lifestyle I will need £25,860. Even in a low inflation environment that’s probably closer to £30,000 today.
Work out where your pensions are
Many of us move jobs and end up with more than one. A good financial adviser can support you in tracking them down. An adviser will also help you work out how much you will get from the State and when.
If I could have told my younger self that I might live to 100, I think I would have explained to her that she needed to save more and explain the effects of time by starting early and saving regular amounts for the long term. I’m determined to avoid the regrets expressed by Nadine Stair “If I had my life to live over again” but have I or will I have saved enough to fund living to 100?