Why you should be planning for a 100-year life

According to Eurostat, life expectancy at birth in the EU increased by 2 years for women and 2.9 years for men between 2002 and 2021. As people continue to live longer, the way your life will look after the age of 50 is likely to be very different to previous generations.

Aegon recently released an interesting report examining this exact phenomenon. Dubbing the years after the age of 50 the “second 50”, Aegon surveyed both working and retired individuals on how they expect this period of their life to look.

Read on to discover what people had to say, and to gain insight into four important things to consider as you prepare for or move through your second 50.

1. The point at which you stop working and how you retire is likely to change

As people live longer it is probable that both the age at which, and how you retire is going to change.

Aegon expects that people are likely – either through choice or necessity – to work to an older age as their life expectancies increase. The recent rise in remote and hybrid working may also make it easier for you to keep working for longer.

Among the individuals Aegon surveyed, the most popular motivations to continue working were:

• I enjoy working and working life (57%)

• I want to keep my brain active (54%)

• I haven’t saved enough (29%).

As you can see, many people expect to continue working later in life through choice, however, some believe they won’t be able to retire for financial reasons (more on this later).

The point at which you retire may not simply depend on whether you want or have to work for longer. In your 50s and beyond you may find your decades of professional experience make you very valuable to employers.

You could also find that how you retire is different to previous generations.

Rather than going from working full-time to not working at all, you may find yourself entering a phased retirement towards the end of your career. Only 27% of the working people Aegon surveyed expect to stop working immediately when they retire.

Living longer opens the door to a “multi-stage life”. Aegon describes this as an approach to life which gives you the option of reorganising your time so that activities (such as leisure, work, learning, career breaks, or caring) take place across your whole life, and not necessarily in a chronological or conventional order.

There is no reason for you to follow the traditional route through life of education, then work, then retirement. You may consider pursuing an academic passion, change in career, or career break at any point in your second 50.

2. Living and working longer may change how you manage your wealth

Of course, while there are many upsides to a longer life, the prospect of living well into your second 50 may make you justifiably concerned about your finances. So, it’s important to consider how you might fund what could be decades of your later life.

Not having enough resources for retirement is a common concern. Indeed, Aegon’s study found that 45% of people are worried about running out of money in their later life.

As you have read, working until later in life than previous generations may be essential for many in the future. Whether or not you want to work longer, staying in employment for more years does provide extra time in which your savings could grow, and more opportunity to contribute to your pension.

If you’re planning for your retirement, it may be useful to make sure you are up to speed on how you can withdraw from your pension. Speaking to a financial planner could help you ensure you are accessing your pension in a way that protects your long-term finances and helps you avoid depleting your savings too quickly.

3. Longer lives and developing social norms mean changing family structures

Increasing life expectancies has seen a rise in the prevalence of the “sandwich generation”, a term used to describe those who provide financial support for both younger and older generations.

However, longer lives are not the only cause of this trend.

Aegon theorises that high housing costs are contributing to a growing number of adult dependents living at home until later in life.

People are also having children later. The Brussels Times reported that, between 2013 and 2021, the average age of a female EU citizen when giving birth to their first child rose from 28.8 to 29.7.

In addition, blended families can also add complexity to intergenerational financial support.

Providing support for your loved ones both young and old is a priority for many, but being responsible for two generations may make it harder to focus on your personal financial goals – a challenge that more people than ever are likely to face in coming years.

4. Living longer may lead to more health challenges

One unfortunate reality of a longer life is that you may be more likely to develop serious health conditions.

Aegon’s research found that 82% of people are somewhat or very concerned about their health in older age. However, only 25% of people have factored potential future social care expenses into their retirement saving needs.

Health and social care may not be fun aspects of your future to plan for, but they could be critical. One of the likely differences in your retirement when compared to previous generations is that you may have to consider how you will pay for social care or other health-related costs.

Get in touch

If you are looking for ways to live your best second 50, then talking to a financial planner can help. Please contact us at info@blackswancapital.eu to find out how we can assist you in building the future you want.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.