SPONSORED | The prospect of living longer will completely disrupt our long-standing assumptions of the planning, management and transfer of wealth. Read more from Investec
SponsoredLiving longer means not just working for longer, but also allowing for more growth in your investment portfolio than you would have previously. I was recently asked by two prospective clients, who are both in their mid- to late 50s, to prepare recommendations for them as they contemplate early retirement.
Keeping the above in mind, what would happen to planners' financial projections if their clients added another 20 or 30 healthy years to their lives? And what if it were more? The prospect of greater longevity will disrupt our long-standing assumptions of the planning, management and transfer of wealth.The concept of stopping work at a certain age is a fairly recent invention.
As an example, consider a male aged 65. To be 50% sure that he won't outlive his income, he should plan for at least 16 years of income, at which point there is still a 50% chance he will be alive and that he will need more than what has been accounted for. On the other hand, if he wants to be 90% sure, he needs to plan for at least 28 years of income. At that point, there is about a 10% chance he will still be alive and need more income than he planned for.
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