Longevity and money, a Financial Planner’s perspective… According to the Australian Bureau of Statistics there are 24,772,112 Aussies as I write this. ​Making an allowance f​o​r births, death​s​ and immigration we get a net overall increase of approx. one person every 1 minute.

​When we look at the retirees, ​64% of 65-69 year olds are retired. Compared to 82% of over 70-year-olds bring retired. In 2016 -17 there were 3.6 million people aged 45 years and over, who reported they were retired from the workforce. This consists of 1.7 million men and 1.9 million women.​ O​f these, 52% were over 70, so 1.872 million people. That is a lot of people and big weight on our social security system if they needed to access it. The good news is that not all do.

This then begs the next question, what is the average that we are living as Aussies? 

Combined life expectancy in Australia is 82.45 years. In the U.S. it is 78.74 years and in Japan its 83.84 (figures courtesy of Google). So we are doing pretty well here in Australia with our medicine and general standard of health. 

Why is all this relevant?

Because it begs the question, how long will your money last? Clients ask this every week and I have been in this business for 22 years.

One of the biggest risks to Australians is outliving their money. A retiring 65-year-old, has a life expectancy of 18 years or around 2.6 market cycles (assuming a market cycle is 7 years). However, if you get to 60 the chance of getting to 90 is exponentially higher. So potentially we are looking at 25 years for a 65 year old or 3.6 market cycles. What is the relevance of a market cycle? It determines the amount of risk you can reasonably bare. It is an indication of whether you need to be more or less aggressive with your investment selection.

When it comes to money, it needs to last for both members of a couple. So whether one of you reach 90 or whether you both reach 90 there needs to be a pool of cash &ZeroWidthSpace;available along the way. My experience has been that the energy levels of my clients who are <75 years of age is significantly greater than >75-year-old clients. Younger clients in retirement tend to be spending more to enjoy life, then have cash pile up after age 75. At this age you are required to draw more from super but you are not anywhere near as active.

So consider your longevity. Consider how long your mum and dad lived and consider your health and ensure that when you make a decision around your money, that you are considering how long you need it to last when &ZeroWidthSpace;choosing your investments, you may have longer to invest than you think!

By the way we Australians just ticked over 24,772,137. 


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