As modern medicine advances and health practices become more advanced, the average UK life expectancy continues to increase.

As a 55-year-old man in 2022, you can expect to live to the age of 84, and there is a 1 in 10 chance you’ll live to age 97. A 55-year-old woman can expect to live, on average, to age 87 with a 6.6% chance of living to 100.

The outlook for the next generation is even more staggering. Recent  Office for National Statistics (ONS) predictions state that 13.6% of boys and 19% of girls born in the UK in 2020 will live to the age of at least 100.

Rising life expectancy means a potentially longer retirement. There’s also the possibility of spending more of your later years in ill health. Not only could you be retired for longer, but you could find yourself paying out for care later in life too.

The importance of factoring longevity into your financial plans is clear. Keep reading to discover three important factors you’ll need to consider, and how Boolers can help.

1. Starting to plan your retirement early is key, but it’s never too late

As life expectancies rise, the time you’ll spend in retirement is likely to grow too. The best way to ensure you can live comfortably throughout the whole of your retirement is to start planning early.

You’ll need to ask yourself some important questions:

• When do I want to retire?
• How do I want to retire?
• How long might my retirement last?
• What do I plan to do in retirement?
• How much will my planned retirement cost?

As with any investment, having an ultimate goal in mind is crucial. It will help you understand how much you need to contribute, and the amount of risk you are willing to take and allow you to track your progress.

You’ll need to factor in your potential life expectancy, decide whether a traditional cliff-edge, or a phased retirement, is right for you, and think about your retirement plans.

World travel will likely be more expensive than taking up a hobby locally. Remember too that your outgoings in retirement won’t be static. The early, “active” years of your retirement might be expensive. While your outgoings might decrease over time, they could rise again in the future if care is required.

If you think you might have a pension shortfall, it is never too late to top up your pension and rethink your household budget, so be sure to get in touch and see how Boolers can help.

2. A longer life might mean working for longer

In December 2021, the government confirmed that the proposed increase to the State Pension Age could occur eight years earlier than originally planned. The rise to age 68 was originally due in 2046 but could now be phased in between 2037 and 2039. This could have huge consequences for those born in the 1970s.

While a rising State Pension Age might force you to work for longer, many are opting for this by choice. One reason for this is increased life expectancy. It also highlights the growing trend of phased retirement over the traditional cliff-edge option.

Research from abrdn has found that, of the people set to retire in 2022, two-thirds intend to keep working in some capacity. Many cited the desire to boost their pension savings as a reason, but for many others, it is the social and mental health benefits of staying active and in work that has had the greatest influence.

3. Think about your potential care costs in later life

As life expectancies rise, the number of years spent in ill health is increasing too. When planning for your retirement, you’ll need to factor in potential care costs, while also including a contingency for what happens to that money if you don’t need it for care.

According to carehome.co.uk, the average weekly cost of living in a residential care home is £704, while the average nursing home cost is £888 a week across the UK. That’s £36,600 and £46,100 a year, respectively.

While the government’s recently announced social care cap might help, if you have assets above £100,000, you’ll still need to cover care costs yourself. The cap also covers “personal care” only, and excludes costs like rent, food, and utility bills.

At Boolers, we can help you build a fund to cover the cost of later life care while ensuring it can be channelled elsewhere or passed on tax-efficiently if care isn’t needed.

Get in touch

A long-term financial plan will be aligned with your retirement goals. We use sophisticated cashflow modelling techniques to help decide how much money you might need in retirement. We can then help you to save enough to make your dream lifestyle a reality, however long your retirement lasts.

If you would like to discuss saving for retirement, or you have questions on any other aspect of your long-term plans, please contact us today.

Please note

The value of your investment 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. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.