Money

Are you willing to outlive your savings?

Jul 19, 2016

First, people were expected to live until they were 80. Then 90. Now 95 and even 100 are common defaults when financial planners tell people how much to save for retirement.

In their book The 100-Year Life: Living and working in an age of longevity, Lynda Gratton and Andrew Scott rightly point out that just as globalisation and technology changed how people lived and worked, so over the coming years increasing longevity will do the same.

Long life as a curse has been the centre of most of the discussions of longevity because the topic has been seen as one of death and taxes: the talk is of frailty and infirmity, of an Alzheimer’s epidemic, of rising medical costs and a looming crisis. However, with foresight and planning, a long life is a gift, not a curse. It is a life full of possibilities, and the gift is the gift of time. How you choose to use and structure that time is at the heart of the response to living longer.

A life well lived requires careful planning in order to balance the financial and the non-financial, the economic and the psychological, the rational and the emotional. Getting your finances right is essential to 100-year life, but money is far from being the most important resource. Family, friendships, mental health and happiness are all crucial components.

Relationships over long lives will transform, in part because the financial and saving requirements are easier when both members of the household work. Moreover, as both partners embark on multi-stage lives, they will have to coordinate with each other as they enter into different stages and support one another at different times.

Even more dramatic will be the emergence of four generations within a family living at the same time. With life expectancy growing faster than the age at which women become mothers, we will see much more complicated family structures and changing generational attitudes.

The forces that shape the living of a long life are economic and financial, psychological and sociological, medical and demographic. Issues of identity, choice and risk become central to questions of navigating a long life. The longer your life, the more your identity reflects what you craft rather than a reactive response to where you began. Simply following the herd is not going to work.