At Nicholls Stevens we are experts in retirement planning. However, it is important that we, as well as our clients, move with the times.
We have two distinct sets of clients: the first are those who are now very close to retirement and the second those in their 30s and 40s who are planning for the future.
If we look at those in their late 50s and early 60s, you would think that planning was simple, the clients have a known source of capital and income to support them through retirement. However, there is a big problem and that is we have not moved with the times. We have been basing our retirement savings on data which is out of date.
If I ask one of my 60 year old clients when they think they will die, they will give me an answer based on their experience of when their Mother or Father died, so they will reply “oh my Dad died at 73 so maybe age 76” National statistics 2014 show the life expectancy for a male of 60 to be 26 years, so there is a probability that my client will live 10 years longer than he predicts. This is good and bad news, the bad news means that his retirement savings will have to stretch out a further 10 years. There is the additional problem that the longer we live the more likely we are to need some form of long term care which will be an additional unexpected expense and drain on our retirement savings.
A further unforeseen consequence of the situation in which the 60 year olds find themselves is that whereas they have in many instances inherited capital from their parents, it is less likely that they will be passing on capital to the next generation as it will have been used up in the expenses explained above.
This then leads us to the younger generation and my plea is that we do not make the same mistake again and that we move with the times. The improvement in medical science would indicate that the next generation will live even longer and healthier lives. We have seen society adapt easily to the change from the one job for 40 years to a more flexible work pattern. The exciting news is that recent research shows that many people are already considering retraining in mid-life and having two careers during a lifetime. Financial planning needs to be able to adapt quickly to changing social and economic needs. It seems likely that there will not be just one date, the retirement date, when financial support is needed but at many points during a long and healthy life.