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Putting a man on the surface of the moon must rank as one of the stellar achievements of the 20th century; even more impressive is the extension of human lifespan during this period.
At the start of the 20th century, UK life expectancy was a mere 45 years for men and 49 years for women. By the end of the century, life expectancy was 75 years for men and 80 for women1.
Since then, life expectancy has continued to rise alongside medical advances and improvements to the standard of living. A longer life expectancy is good news, but it has a significant impact on retirement advice.
Longevity is perhaps the most difficult part of the retirement puzzle for both advisers and clients for the following reasons:
Now more than ever, advisers need to maintain close relationships with their clients throughout retirement. The notion of a ‘one and done’ solution is likely to prove ineffective in dealing with the twists and turns a longer retirement can bring.
Traditional life expectancy figures are not going to give you an accurate picture when planning a sustainable retirement income for your client. Even the most thorough of planning is not going to completely remove the risk of your client outliving their assets, particularly as there are so many factors at play.
One way to provide a greater balance of security, flexibility and control is to look at the way you can layer solutions together.
Selecting a guaranteed income to cover essential retirement spend can largely remove longevity risk, while allowing you to invest your clients' other assets with more flexibility. When planning a sustainable retirement income, it is clear that the value of sound, ongoing professional advice will become more and more important in helping clients achieve their objectives in retirement.
1Century of change: Trends in UK statistics since 1900, Research paper 99/111 House of Commons, 1999.
2What are your chances of living to 100? Office for National Statistics.
3Our predicted view of the survival of a healthy 65 year old in a more advantaged socio economic circumstance.
4Healthy life expectancy at birth and age 65 by upper tier local authority and area deprivation: England, 2012 to 2014, Office for National Statistics, March 2016.
This website is designed to give professional financial advisers information and tools that they can use to help control and develop their business and should not be relied upon by private investors or any other persons.