Can you afford to live to 100? | Investing for the future

Can you afford to live to 100? Investing for the future

Centenarians the new norm?

What may have seemed resigned to science fiction just a few years ago appears to be well within our grasp. Generally people are living longer in the developed world and now many experts are predicting that 100 to 110 could become the new norm in terms of life expectancy.

In the UK it is estimated there are around 9,000 centenarians while in the US there are around 72,000. Longevity therefore is already here for some but this could be very normal and people over the age of 110 will be the ones that attract news headlines, not centenarians. Jim Mellon, who is a widely respected entrepreneur who appears to have a knack of predicting the future certainly believes this to be the case.

Whilst this may seem like great news – it does have some downsides in terms of financial planning – the biggest one being that most people and policies are not taking this into account so are not planning!

Older and healthier

For the most part, due to technological and medical advances, we will be healthier in old age than we are today. Obviously this will also depend on our own lifestyles as well as medical treatments. One thing Jim points out in his video and that the World Health Organisation have been predicting for some time is that there will be disproportionately more older people than younger due to fewer births.

Currently, if we live longer, we are also retired for longer and this is likely to continue for the foreseeable future. Policy is already taking this into account by increasing retirement age but it is not enough if 100 is truly going to be the new norm. Pension plans are just not prepared for this.

Older & Poorer?

As it stands at present, most people are expected to live to 80-85 years and pensions have had to adjust for this. If people do start to live much longer the pension pots are not going to be big enough. Pensions will run out of money and some insurance companies could collapse under the pressure.

Government pensions certainly won’t be able to meet the demand to give people financial security in retirement, neither in the UK or anywhere else. Most of the developed world already has unsustainable amounts of debt.

Many people will struggle financially in retirement due to inadequate pensions, poor planning and in some cases due to spending their pension pot by taking it early. This means that Governments around the world will have to raise retirement age much higher than they are today – possible well into the 70s or even 80!

The recent change to pension policy introduced by the previous UK chancellor has led to many people taking part or all of their pension out at the age of 55. For those who invest this money wisely it may be the best decision they ever make, but for those who spend it or put it into a bank it will probably not be the case because there will be little or nothing left for them to live on if they do indeed live much longer than expected.

Take control of your own future

I’m a firm believer in taking responsibility for my own destiny where possible. Personally, I believe that property is still a great investment and will provide a steady income in retirement. I started investing in property in 2012 and could not be happier with the returns. Rental income from owning just 3 properties in the Midlands can produce a return of around £1,900 per calendar month, less tax and expenses but if you take into account capital growth as well such an investment provides great financial security for the future.

Property prices do tend to rise over the long-term and if someone is investing for a pension then it is the long-term they are interested in.

Rental income provides a steady income in retirement and rents will also rise. There is a property shortage in the UK meaning that there is an ever increasing demand for rental property.

Planning is key

Obviously planning is everything and weighing up property purchase deals is very important. Financial planning is important and I don’t have all of my eggs in one basket as I have a work pension and stock market investments too. If I could only choose one though, for me it would be property.

Property Investment Books

If you want to delve a little bit deeper into the topic, rather than spend a fortune on seminars, take a look at these property investment books. Even if you bought all 3 you would be paying less than £30 and the information contained in them will give you a good starting point if you are considering investing in property.

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    Disclaimer

    This post is not meant to be financial advice and all investments carry risks as prices may fall as well as rise. Seek financial advice if you are unsure.