People forget that it was not so long ago you retired from work and died shortly after.
Today, most people look forward to having time in retirement to be able to spend with their families, travel and generally enjoy life.
Provisional data from Public Health England for 2017 indicates life expectancy at birth in England has now increased to 79.6 years for males and 83.2 years for females. So we are living longer, which is good news.
However, healthy life expectancy is only 63.3 years for males and 63.9 years for females in England. So that’s potentially between 16 to 20 years of living in poor health.
What does this mean for our finances, and for financial planning?
Post-55 we are now faced with a heady cocktail of financial temptation – being able to draw on housing equity and pension pots.When we surveyed over-50s, many said they had not saved enough.
They told us they were planning to work until perhaps seven years beyond their retirement age – that would take somebody with a retirement age of 66 to about 73.
Potentially that would mean people trying to work through ill health, or being incapacitated and not being able to work when they financially still need to.
And, as we age, mental capacity tends to decline, meaning our ability to manage our finances also declines.
So what can be done, and what does this mean for advisers?
A lot of the advice burden will fall on advisers, so they have a vital role to play.
They will often need to have what can be complex and difficult conversations, particularly as their clients age.
Many people for a long time thought that in your 50s financial planning was ‘done and dusted’ – you have your pension, and you have paid off your mortgage.
But that is not the case anymore. Financial planning now starts in earnest at 50. It should have started a long time before.
But these days at 50 we need to face the fact that we will need more and more help with our finances as we get older.
When you think about the mix of assets owned by people these days, they are more complex than ever before. A typical average household has housing wealth, pension pots, savings and investments.
That mix of assets needs to be managed carefully to ensure consumers can release cash at a time when they are most likely to need it.
And post-55 we are now faced with a heady cocktail of financial temptation – being able to draw on housing equity and pension pots.
But our research shows most people are not considering the financial implications of deteriorating health and mental capability, and any potential later life care requirements.
Organisations like The London Institute of Banking & Finance, and the financial advice community, need to keep educating consumers about the complexities they will face, particularly as they get older.
And, of course, we have a key role in supporting advisers.
We recommend advisers continue to invest in their qualifications and keep up with developments, so they can not only offer comprehensive financial advice as their clients age but also potentially reach out to what is likely to be a growing market.
Qualifications in long-term care and later life planning, pension transfer and equity release could all be useful for advisers wanting to specialise in this field.
Brian Wilkinson is managing director of corporate and professional qualifications at The London Institute of Banking & Finance
