Eventually, life in retirement settles into a nice rhythm. Most folks get to a point where they have everything they need – they’ve taken the big holidays, bought the camper van – and they find a level of balance in their daily routine. That’s exactly as it should be, but presents some challenges and also some opportunities…
I’ve called this section ‘the longest holiday', which harkens back to one of those things that you hear when you become a financial adviser; at least you did back in the late nineties. I was told to speak to clients about retirement in terms of the longest holiday of their lives.
And that’s kinda true isn’t it – IF you define holidays as not working, or doing things that you enjoy. However you define or describe it, retirement is a unique phase of life, and hopefully a long one…
Retirement is (Hopefully) a Long Time
I say hopefully, because of course, none of us know what’s around the corner. I’ve worked with plenty of client couples over the years who have looked forward to retirement together after a working life, only to have just a few years and on a couple of occasions only months before one of them passed away. That’s always deeply tragic and offers a salutary lesson to enjoy the journey towards retirement, not just the destination.
But even if we retire at state pension age, there’s a very good chance that one partner in a couple will live until past age 90. So that’s at least 24 years and possibly more. If you’re thinking of retiring early, then potentially retirement could be three or four decades long, which represents more than a third of the average life expectancy.
I don’t know about you, but I often don’t think of retirement like that. I think of it as the end game, perhaps, but in football terms this is the last half an hour of a 90-minute game, potentially. If you were watching a crucial match and there were 30 minutes left, you’d think there was everything to play for still…
I think it’s important to have that perspective. Retirement really isn’t a wind-down, certainly not in the first decade or two. This potentially long holiday means that you’ve got to think long-term with your money.
In my experience as an adviser, people vastly underestimate their probable longevity. I hear it all the time. I even had a client look me in the eye and tell me he’d be dead before age 75. He’s now nearly 85 and still going strong, which weirdly, he’s almost annoyed about when I talk to him!
There’s a little longevity calculator on the ONS website. I put in my age and gender and my average life expectancy is 84. It gives me a 1-in-4 chance of living till age 93 and a 1-in-10 chance of living till age 98. If I put in that I’m a 65-year-old female, then the average life expectancy is 87 with a 4.9% chance of living till age 100.
Of course, averages cover a multitude of possible outcomes. For every centenarian, there’s someone who dies too early. But it’s no good planning to go early, because you probably won’t, and so we need to think long-term.
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