Why we should ALL plan to live to be 100 years old
Good health: businesswoman and fashion icon Iris Apfel turns 102
How would your finances hold up if you lived to be 100? As the number of centenarians in England and Wales hits a record high, financial experts warn savers should plan their finances for the possibility of them reaching 100 too.
Official figures last week revealed that the number of centenarians has more than doubled since 1991, to 13,925 in 2021. A quarter reported being in good or very good health, as did American businesswoman and fashion icon Iris Apfel, who is 102 years old.
Stewart Sanderson of investment management firm Brooks Macdonald advocates planning to reach age 100. “We look forward to further improvements in medical science and a growing body of health knowledge,” he says. “This makes it increasingly likely that a 50-year-old is only halfway through his or her life.”
Wealth manager Evelyn Partners crunched the numbers from Wealth and Personal Finance to show how much you would need to save for a good standard of living if you lived to be 100. She revealed that if you want a minimum standard of living, with few holidays, luxuries or home improvements: you would need to have saved £17,500 by the time you turn 67. This assumes you own your home outright and are eligible for the new full state pension. He would also have just £1,435 left in savings when he turns 100.
For a moderate standard of living, you would need £283,000 at age 67. This would allow you a few more luxuries, such as a vacation to Europe each year and some money for home maintenance and decoration. For a more comfortable retirement until age 100, you would need £638,000 saved, according to Evelyn’s calculations.
The figures assume that you exhaust all your savings by the age of 100. If you wanted to pass some down to your loved ones, you would have to save more. However, the calculations assume that you do not tap into the value of your home during your lifetime by releasing equity.
Lucie Spencer, director at Evelyn, says: “A large proportion of older people have the majority of their wealth in their home, especially with house prices rising over the last 40 years or so.
“Many older retirees who wish to remain at home will need accommodations that allow them to continue living there comfortably, all of which should be taken into account in their financial planning.”
Ade Babatunde, director of Investec Wealth & Investment, adds that retirees should also consider that their expenses will not be fluid over the decades and that care costs can accumulate in the future. ‘When we help clients with financial planning, we assume that care costs equate to around £52,000 and nursing care costs equate to £78,000 per year. Furthermore, the cost of healthcare is typically two to three percentage points above inflation.’
Steven Cameron, director of pensions firm Aegon, says the rise in the number of centenarians should be a wake-up call for those planning their future lives.
“While living to 100 is still not the norm, it is something we should not dismiss as ‘not for me,'” he says.
‘A longer life expectancy means we must think differently about future life. Our later years may be very different to those of previous generations: in many ways we are in uncharted territory.’