We believe there are basically 3 possibilities. One is that you will reach retirement; the other is that you will never retire because you will work through to the point of death and the third is that you will die before a normal retirement age.
Statistically the chances of any individual in normal health dying before retirement are miniscule. Below we provide some examples of the life expectancy of an individual male and female at different ages and also the likelihood that they will reach the age of 65 as opposed to not reaching 65.
Life expectancy and the probability of reaching retirement:
For males the life expectancy from birth is now around 77 and for females nearly 82.
Once men reach age 65 there life expectancy is just over 17 years and for women it is 20 years.
For both men and women of average health at the age of 40 they have well in excess of a 95% chance of reaching retirement age.
Even for those in their 20s the chances of reaching retirement remain above 90%.
All the figures have been increasing in recent years which mean that the expectation at the moment is for these life expectancies to get even higher.
The simple conclusion from this is that both men and women will almost certainly reach retirement and once they have reached will live a long time. This implies that (a) everyone should expect to reach retirement and (b) will need funding for a long term to be in place.
A typical scenario today might be someone beginning work having left college or university at the age of 22, working for 35 years to the age of 57 and then retiring. If they lived for a reasonable length of time vs. the average they may well live until they are 92 which means they would effectively be in retirement for as long as they have been in work. This will not be an unusual situation in the future.
For those people who think they will keep working forever and a day, this may well be a possibility and there are many examples of people who work well in to their 70’s and 80’s but in reality the majority of people not only do not work beyond 60-65 but in many cases would not be able to work due to issues of physicality and in some cases ill health.
We believe that it is one of the biggest reasons why people run into problems with respect to the amount of money they have in retirement is that they believe in the credo ‘Live for today and don’t worry about tomorrow’ when in reality the situation is that for the very high percentage of people in this country they will reach retirement age and they will have many years in retirement. In addition, those retirement years, given current health improvements and medicines, could be extremely active which implies that the monies required in retirement are likely to be higher than they have been in the past. |
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