Planning towards your century

In the third instalment of our Summer Financial Focus, here at SG Financial Services we look at how much the quality of a long life depends on how well we’ve planned for it.

The number of people who celebrate their 100th birthday has quadrupled in the last 30 years, according to the Office for National Statistics (ONS). Pre Covid-19 this trend looked likely to continue, with the ONS forecasting that around 19% of all new-born girls (and 14% of all new-born boys) will become centenarians.

The downside of living a long time in retirement is that your finances might not last the course. Most people start the last third of their lives in reasonably good health and with apparently adequate resources. But a long life does not always imply a healthy life. You might well need help with care costs if you were to fall ill or require help with your basic living activities. It is also likely that individuals
will have to make a significant contribution towards their care costs in the future.

The other calls on retirees’ financial resources may come from their families. The costs of going to university, buying a house, as well as school fees for the youngest relatives could all impact on the solvency of that great institution
– the bank of mum and dad, or grandma and granddad. In addition, there could be the need, or at least the desire, to make a dent in a potential inheritance tax bill by making some lifetime gifts.

The traditional three life stages of education, work and retirement have become increasingly blurred as people retrain, set up their own businesses and switch careers for a longer working life. This gradual transition from work to retirement needs to be planned for.

Creating the right mix between investments, pensions and earned income will be key: planning that far ahead is never easy, so professional financial advice should be your first port of call.

If you are drawing up a financial plan to see you through to your late 90s, here are some practical steps to consider:

Be flexible: Financial plans and your attitude to them should be flexible to cope
with unexpected changes. As we’ve seen recently, stock market falls can impact
on your portfolio and pensions and you may be forced to adjust your plans, such
as reviewing the age you intend to start drawing your pension.

Start saving early: The longer your money is invested, the more it should be worth, thanks to the benefits of compound returns. Retirement may seem a long way off if you are in your 20s and 30s, but money put aside now can make a difference to your financial wellbeing in your 70s or 80s.

Know what you have: Pensions are probably the cornerstone of your retirement plan, and they offer valuable tax relief. Keep track of your various pensions and get an up to date valuation of your State pension entitlement.

Maximise savings: If you get a pay rise, increase your pension contributions so your savings keep pace with your income. It may be prudent to invest at least some of any windfall, for example from an inheritance, rather than spend it all at once.

Review your essential bills and additional spending: If you are able to enjoy a healthier and more active later life, you may need more funds for leisure activities or holidays. Judicious cash flow planning can help you gauge how much you may need to save for any given stage.

The value of your investments, and the 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. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

How can we help?

If you would like some more information on what help we can offer regarding your savings and investments portfolio, please contact us on or call 020 8371 3143

This piece is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The piece represents our understanding of law and HMRC practice.

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