What is your 100-year plan?

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What is your 100-year plan?

Have you ever imagined yourself blowing out 100 candles on your birthday cake? No? Most of us are too busy to think about anything beyond next week! But it may not be such a stretch of the imagination to reach 100 years according to the experts, who say longevity is increasing with no end in sight.

Today almost half of use can expect to live beyond 85 years. For the young ones born in 2013, 16% of females and 10% of males can expect to reach 100 years.1

With many people aiming to retire in their 60s, a little maths tells us we might be looking at a (very) long retirement.

So, how can we make sure our retirement is long walks on the beach rather than baked beans on toast every night? We need a plan, of course, a 100-year plan.

Can you afford to live until 100?

Joining the Centenarian club like a blast, but can you actually afford to live until 100?

Coming up with a lump sum figure you’ll need for retirement is tricky. It depends on your lifestyle expectations, health, relationship status and any regulatory rules and changes.

Your final innings is also a big factor, and as we’ve seen above it may be wise to start planning for a longer rather than shorter life.

To live comfortably in retirement, the Association of Superannuation Funds of Australia (AFSA) suggests you need2

  • Couples – $60,977/year from 65 years and $56,901 from 85 years
  • Singles – $43,317/year from 65 years and $41,156 from 85 years

AFSA estimates the lump sum needed to support a comfortable lifestyle for a couple is $640,000 (or $545,000 for a single person) assuming a partial Age Pension.

Financial planning for a longer lifespan

It’s easy to get distracted by the dollars. But it’s really important to think about life goals, dreams and expectations first. It might sound a little airy-fairy, but these are the things driving your financial needs, right?

Where do you want to be at retirement? Thinking about your next adventure is exciting, but have you thought about what you’d likely you like to be doing at 70 years? At 80, 90, and – dare we dream about it – 100 years?

Once you have a clearer picture of the years ahead, it’s time to think about how to get there, financially:

  • Do you need to start making extra super contributions now?
  • Should you start a savings plan?
  • Where can you save money now to benefit your future?
  • How can you add additional income streams to your income pool?

You need to be realistic about your needs and allow for the things we’d all like to avoid, like illness and inflation. A flexible financial plan, with a wider variety of income sources, is the most secure path to the future.

Working longer

An obvious way to gather more money to fund your retirement is to work longer. And while snoozing the morning alarm for another 10 or so years isn’t very appealing, that’s exactly what many Aussies are doing.

The most recent stats reveal a big jump in the retirement age. For those aged 45 years and over who are retired, the average age at retirement was 55.3 years, while for those who had retired in the last 5 years, the average age was 62.9 years.3 Who knows what the retirement age will be when you make it there. (Hint: it may be time to find a job you love!)

Making your money work harder

So, what should your retirement nest egg look like? How do you work your money so that your retirement fund is more golden egg than rotten egg?

Ideally, you want your capital to keep growing, with your returns more than your annual income. “Historically only growth assets, such as shares and property, have consistently outpaced inflation,” say the experts, so you should ensure you have enough of your nest egg allocated to growth assets.4

On the other hand, we all saw what happened to growth assets during the GFC – so experts also suggest having two years of capitalised living expenses as cash.

Protecting your lifestyle

While we can make predictions, the road ahead is unknown. Be optimistic. You have the gift of time – so much time according to the stats. But be realistic, too. As you’re planning, think about all those bumps and forks in the road ahead, and how you can protect your family and your lifestyle for those wonderful years ahead.

Insurance can help protect you and your family in the coming years. Choosi makes it quick and easy to find the right insurance for you – compare providers and quotes for life insurance, income protection insurance and funeral insurance today.

References

  1. Longevity in Australia: prospects and implications [PDF]Australian National University
  2. How much is enough?ASIC’s MoneySmart
  3. Retirement and Retirement Intentions, Australia, July 2016 to June 2017Australian Bureau of Statistics
  4. How to afford to live beyond 100The Sydney Morning Herald

Posted: 07 Jun 2019

This is general information only and does not take into account your personal objectives, financial situation or needs. You should consider the relevant PDS available on this website prior to purchasing any product. Choosi offers insurance products from a range of brands but does not compare all products available in the market.

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