Danby Bloch of Platforum writes in Money Marketing about an important (maybe the most important?) financial planning consideration, life expectancy.
This was prompted by him reading a book called The 100-Year Life: Living and Working in an Age of Longevity by Lynda Gratton and Andrew Scott.
The authors both teach at the London Business School – Gratton specialises in management practice, psychology and HR, while Scott is a distinguished economist looking at finance, industry and investment.
The longevity threat – or opportunity – is very real. Danby says that his 11-year-old granddaughter has a 50 per cent chance of living to age 100, along with the rest of her cohort in the UK. In contrast, people who were born over a century ago had less than a 1 per cent chance of living to the age of 100.
The book states: “The simple truth is that if you live for longer then you will need more money. This means either saving more or working for longer.”
The three-stage life of education followed by work and ending up in retirement is no longer viable for the 100 year life, especially if the aim is to work for about 40 years and retire in one’s 60s. It is simply unrealistic to work for 40 years and save enough to retire for another 40 years. So, what are the secrets of a successful 100-year life?
We need to stop thinking in terms of the old three stages and start to adapt to a new multi-stage life. If we stick with the three-stage model we will have to stretch the working stage so long that it will become too hard, too exhausting and, quite frankly, too boring.
Instead people will have multi-stage lives, with different careers, at some stages possibly focusing on hard work and long hours and at others looking for more of a work/leisure/education balance. We will need to be prepared for multiple periods of transition from one stage to another, to focus on new networks, knowledge and skills.
But it isn’t just his grandchildren and her friends who have to contend with the challenges of longevity. Someone in their mid-50s now has roughly a 20 per cent chance of reaching 100.
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