Everyone’s situation will be different but we believe in tailored financial planning for the future in order to match an individual’s goals with the most appropriate strategies – to try to get it as accurate as possible so you don’t risk not having enough down the track.
One of the interesting sessions we attended at a recent Portfolio Construction conference in Sydney concerned longevity. David Williams, an expert on longevity pointed out how in NZ, the average life expectancy for a new born male is age 80 and for a female: 84 years. But if you get past the risks of infancy and teenage driving, and you reach age 50 then you are more likely to live much longer: 92 for males and 96 for females.
David then made another unexpected point: clients of financial advisers will probably live even longer than even this average. It’s not that we have a secret anti ageing potion, but clients who wish to get financially sorted also tend to invest in their health. Expect a telegram from the Queen, we say.
But don’t be surprised if we ask you: “what do you think your life expectancy is?” At age 50 you are basically only halfway. Will your finances make the distance? In fact a session considered changing retirement attitudes and behaviours and asked this same question.
Beth Segers from US-based Putnam Investments shared research findings about retirees. They found that 25 percent of “retirees” are not retired at all and have gone back to work. Meanwhile 50 percent are helping their ageing parents either financially or physically. About a third are paying their children’s rent or providing their accommodation or living expenses. The most sobering statistic was that 60 percent of US people over age 65 still have a mortgage on their home and on average this will be paid off by age 77.
In this regard how we look after our own health, and how we plan our working lives becomes crucial. The NZ 2006 Census showed that
45% of men aged 65 to 69 were in full-time or part-time work and 20% of men aged 70 to 74. If we opt for working longer, we would want work to be satisfying and engaging and at our own pace; not get too burnt out too fast. We may choose to have different careers or work engagements.
How we plan our finances becomes more relevant if we are living longer. Allocation of our current income becomes more of an issue:
"The most sobering statistic was that 60% of US people over age 65 still have a mortgage on their home and on average this will be paid off by age 77."
to provide for the future but not at the expense of enjoying life today. Appropriate investment strategies have to be adopted to ensure the purchasing power of our savings is maintained. The ways we create wealth may change over time. Our views on risk may need modifying; should we take on more risk to get better returns? Are we too underinsured? Should income protection insurance be extended beyond age 60 or 65?
Everyone’s situation will be different but we believe in tailored financial planning for the future in order to match an individual’s goals with the most appropriate strategies – to try to get it as accurate as possible so you don’t risk not having enough down the track.
