The Financial Planners curse - Life expectancy

This table alone should be sufficient reason to understand the value that a Financial Planner can offer your family. I know I have been discussing the value and what a Financial Planner does but in my view, even if the only thing that a Financial Planner concentrated on was to ensure that you had sufficient capital in your super / non-super nest-egg so that you could outlive your retirement, then they have done an awesome job. 

Back in the 1970’s, most workers retired at age 65. There life expectancy was 7.2 years.  That’s right. You simply needed enough in your bank account to drawdown on to meet your costs of living because it only had to last 7.2 years. It didn’t take rocket science or too much planning as it was a simple process and if their was anything left, then this was the legacy you left your family.

Fast forward to today, and as the table above explains, due to health care and medical breakthroughs we are all fortunate enough to live so much longer. 85 has now become the new 72.5 as an average life expectancy and it’s even worse for women who have a knack of living longer than their husbands. 

Along with this increase in life expectancy, there are other issues that have now popped up. You need to fund nearly as much of a retirement as you have had working life. At least when you are working, you are in receipt of regular salary. In retirement, you don’t get another crack at retirement and so you better be careful with your investment strategies. But, you don’t want to be too careful otherwise the silent assasin that is inflation will eat away at your purchasing power even if you are in the relative comfort of term deposits paying 2.5% at today’s rates. (17th March 2019)  

The relevance of at least planning a retirement whereby you can build enough capital so that you never have to worry about money ever again over at least a 25 year frame as well as have sufficient capital to pay for inevitable aged care bonds and deposits and to transition any chance of a legacy to your children is a huge task. 

Thinking about retirement is tough enough so if you garner any sense from this article, make steps to build as much capital as you can to live a life that you design. This doesn’t make you greedy. It makes you financially independent and that creates confidence and certainty. Get into it.