What age do you expect to live to? Whatever your answer, the chances are it’s a little low. Research from Canada Life found that people underestimate their life expectancy by several years[1].

In fact, there’s a good chance you’ll live to see 100. According to the Office for National Statistics (ONS), if you’re 50 today, you have a nearly 8% chance of becoming a centenarian if you’re a woman, and 5% if you’re a man[2].

What’s more, thanks to healthier lifestyles and advances in modern medicine, life expectancies continue to increase with each generation. Yahoo News reports nearly 1 in 5 female babies born today will live to 100[3].

A longer life is a fantastic gift, but it can bring financial concerns – not least, how you’ll afford an extended retirement. So, here are three ways you could financially prepare to live to 100.

1. Think about how you want to retire

Society is constantly changing, so it’s no surprise that attitudes towards retirement have also evolved.

For your parents’ generation, retirement typically looked the same for everyone. You’d work until you hit the State Pension Age and then stop, collect your pension, and start enjoying your retirement.

However, with longer lives and altering attitudes, you may consider reducing your hours as you get older, continuing to work for longer.

A phased retirement is an increasingly popular option. Indeed, Aegon found that only 27% of people now expect to stop working all in one go[4]. This approach allows you more free time while enjoying the financial and social benefits of work.

At Titan Wealth Planning, we’ve witnessed this change first-hand. Many of our clients work part-time or take on consultancy roles toward the end of their careers and it may be a good option for you.

A financial planner can help you develop a retirement strategy that supports your career and retirement goals. As you’ll read later, we can help you visualise your life in retirement to understand your financial needs and advise on both the time and way you might retire.

2. Work with a financial planner to determine how much you’ll need to retire

Do you know how much you need to save to live the retirement lifestyle you want? If you don’t, you’re not alone. In fact, Retirement Living Standards found that 77% of people are unsure how much they need to retire[5].

Trying to envision what your life may look like in your late 60s, 70s, and beyond can be tricky. However, it may be vital. By visualising your future self, you can consider what your expenditure may look like and build a retirement fund accordingly.

As a reference point, the Retirement Living Standards have calculated that a couple would need £43,100 a yearto live a “moderate” lifestyle. This budget would allow you to enjoy a good level of financial freedom and flexibility. If you want more financial freedom and some luxuries, a “comfortable” retirement lifestyle would cost £59,000 a year. To live the same lifestyle, a single person would need £31,300 and £43,100 a year, respectively.

However, everyone is different. You’ll likely have trips you want to go on or pastimes you wish to pursue in retirement. You may also have dependents or other expenditures to factor into your plans. Plus, your costs will almost certainly fluctuate as you age.

Longer lifespans make things even more complicated. With a reasonable chance that you could live to 100, it’s important to think about how you’ll maintain your desired lifestyle throughout your retirement, however long it may be.

We can help you consider all these factors and determine how much you’ll likely need to live your ideal lifestyle, giving you time and opportunity to build the funds you’ll need now.

Read more: Are you contributing enough to your pension to fund your desired retirement?

We’ll use cashflow modelling to help you visualise your finances throughout retirement, giving you reassurance that you can afford the lifestyle you want. Cashflow modelling can also highlight where it may be necessary to increase your savings.

It’s also crucial to devise a pension decumulation strategy.

Pension Freedoms give you a lot of flexibility in this regard. However, with greater choice comes more risk of making a decision that could cost you. Working with a financial planner can give you peace of mind that you’re accessing your pension and other savings in a sustainable and tax-efficient way.

Because pensions typically fall outside of your estate for Inheritance Tax purposes, you may also consider depleting other assets like cash savings, ISAs, and other investments first.

3. Consider how you’ll pay for living and care costs in retirement

There’s a 75% chance that you’ll require some form of later-life care, so it’s important you think about how you’d pay for it.

Unfortunately, Fidelity found only 5% of people have a plan for this[6].

Of those who had considered the matter:

• 47% would use their savings
• 39% would use pension income
• 28% would sell their house
• 24% would look to take income from their savings or pension
• 15% would expect the state to pay.

The state rarely fully funds social care – you’ll almost certainly have to pay for at least some of your costs.

Fidelity calculates that the average person will spend £99,500 on care costs. This number may cause concern, but we can make things more manageable by developing a strategy to fund your care, placing you in a better position later in life.

By putting in the work now, you could give yourself the retirement lifestyle you want and maintain it as you live to 100 or beyond.

Get in touch

If you’re not sure if your finances are ready for retirement, we can help. We’ll take a comprehensive look at your current financial situation, forecast your future, and develop a strategy to get you where you want to be as you reach 80, 90, or even 100.

Email info@aspirafp.co.uk or call us on 0800 048 0150.

Risk warnings

The information contained in this article is based on the opinion of Titan Wealth and does not constitute financial advice or a recommendation for any investment or retirement strategy.

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 tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate estate planning or cashflow planning.

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.

[1] https://www.canadalife.co.uk/news/new-retirement-gap-looms-as-people-underestimate-life-expectancy/

[2] https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

[3] https://uk.news.yahoo.com/number-100-year-olds-triple-173612537.html

[4] https://www.aegon.co.uk/media-centre/news/second-50-life-after#/content/dam/auk/assets/publication/marketing-support/the-second-50-report.pdf

[5] https://www.retirementlivingstandards.org.uk/details

[6] https://www.fidelity.co.uk/markets-insights/personal-finance/personal-finance/why-theres-a-3-in-4-chance-youll-need-later-life-care/