“Aging is an extraordinary process whereby you become the person you always should have been.” (David Bowie)
We often think of getting older as getting worse. But more and more, it’s something else: a long period of living well. People today aren’t just living longer. They are living a lot longer than anyone thought they would. And while that is one of the greatest things people have ever done, it is slowly changing the way retirement looks.
Retirement is no longer a short, last chapter. It’s a long, changing time in life that requires more careful planning than most people think.
The quiet change in longevity
Life expectancy around the world has increased by more than 20 years in the last century. Even though the national average in South Africa is relatively low, this masks an important fact: people with access to good healthcare, a steady income, and a healthy lifestyle often live well beyond their 90s. And even a few extra years can make a big difference in retirement planning.
The longevity gap most people don’t plan for
It might not seem like a big deal to live five to ten years longer. But consider the financial implications:
- Your money needs to last longer
- Inflation works (usually against you) for a longer period
- Costs for healthcare and other care requirements go up
- It’s harder to fix mistakes later in life
Planners call this “longevity risk,” basically the risk of running out of money before you die. Cash flow modelling tools typically show that even a small increase in life expectancy can mean that you may need to cut your annual income by a significant amount to keep your plan going.
Living longer is only half of the story
The real problem is that the cost of getting older is also going up. Medical inflation is still higher than general inflation, and the cost of care, whether at home or in a specialised facility, can be very high.
But there is more than just cost. What if you need help for a long time? What if you can’t make financial decisions on your own anymore? What if a global health crisis makes care less available or more expensive?
One of the biggest risks is a decline in cognitive function. Dementia, in particular, is expected to rise sharply in the coming decades, putting a lot of stress on families and individuals both emotionally and financially.
In many cases, adult children step in, often without warning, to make decisions, organise care, and pay for things. That’s why planning for a long life isn’t just about money. It’s about being clear and respectful, and thus making things easier for the people you care about.
Planning for a longer life
Making a plan for a long life isn’t just one simple decision. It entails a mix of financial planning, adaptability, and alignment with your family. Here are four important things to think about:
1. Plan for more than you expect
It might not be enough to plan to live to 90 anymore. Stress-testing your financial plan to last until you’re 100 or older gives you a better idea of how long your capital will last and shows you where it might fall short, helping you start planning for retirement.
2. Set aside funds for longevity care
Putting money aside just for healthcare and long-term care can help protect against the unknown. This could involve allocating an investment for longevity care, or, if you are younger, creating a new investment to which you make regular contributions. The asset allocation will depend on your time horizon.
3. Make your income more flexible
Rigid drawdown strategies can put too much stress on capital. Your portfolio can stay strong for a long time if you take a flexible approach and change your income based on how the market is doing. It’s wise to reduce your drawdown when the market is underperforming.
4. Talk about what matters
This is the step most people forget, but it’s the most important. Talk about:
- How and where you want to be taken care of
- Who will make choices if you can’t?
Being clear now will prevent confusion, fights, and stress later.
Not just more years, but also better ones
One of the best things people have done is live longer. But if you don’t have a plan, it can quietly become one of your greatest financial risks. The goal is not just to live longer. It is to make sure that those extra years are spent with dignity, hope and options.
With the right structure in place, living a long life is about not just more years, but better ones too. We can help you to make realistic plans for how long you will live, prepare for rising healthcare costs, and ensure your financial plan aligns with your family’s needs and goals.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.
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