Will you retire at 55 and spend 45 years on the golf course?

It’s the Australian dream. Retire at 55 and spend the rest of your life on the golf course, cruising the seven seas or enjoying other leisure pursuits. Sound fabulous? Maybe not. Given many of us will very likely see our 100^th birthday, will we find enough to do for the next 45 years and more importantly, will we have the money to fund our lifestyle of choice.

In this article, we explore the realities of living longer and the social and financial considerations we need to include in our planning now and for the future.

Back in 1950, we expected to live to about 68 years of age before we departed this mortal coil.

Three years after giving up work it didn’t exactly provide a lot of time for making plans. It was also a different money era as there was no superannuation, and retirement relied on personal savings and the government provided age pension.

Fast forward to 2022 and the average life expectancy has increased significantly to a tad under 84 years of age.[1]

That is of course the ‘average’. How many of us have parents or relatives in their 90’s, going strong and likely to make 100?

With increased life expectancy, the work-retire-death model has changed.

These days aged care must be factored in and while records indicate we’ll spend the last two and a half years of our lives (30 months) [2] on average in aged care, we all know of elderly relatives who have lived on for many years more.

Living longer requires adequate funding for our ageing lifestyle, and in future, that funding will be less from the Government and more from our own financial resources.

In our experience, new clients engage us for a range of reasons.

However, the common underlying question most people have is “will I have enough to see me through to the end of my life?”

Of course, the answer is: That depends.

It’s for this reason, we as financial planners, provide financial modelling services that map your financial means from your current age through to 102 years of age.

Our modelling software allows us to illustrate your financial plan as it is today, projecting the value of today’s money into the future, while providing indications of how life’s twists and turns can affect financial outcomes.

Using realistic benchmarks, tilted slightly more to conservative, the modelling considers evolving matters such as when insurances premiums cease, any fees and charges, income from dividends paid on investments and the value of compounding returns.

Common changes include financial boosts such as receiving an inheritance or conversely, deciding to cut back work from full time to part time to enjoy more of life but with less income.

For many people, being able to see a graph that clearly indicates when their money will likely run out (preferably at the end of their life with some left over) motivates them to stick to their plan while providing the confidence they need to live their life their way.

Indeed, having a clear understanding of your money is the key to a financially happy life.

While timing your retirement is important, so too is having a post-retirement purpose.

Interestingly, we’re hearing about more fully retired people returning to the workforce, including Harold, who at 91 is Bunnings’ oldest employee. He put his work boots back on when he was 87 [3].

We don’t know Harold’s financial position, but it seems his going back to work provided an enormous amount of self-satisfaction and the social connection with customers and colleagues appears to be invaluable.

As mentioned earlier, the twists and turns of life can be modelled to provide greater financial clarity that creates that all-important sense of financial well-being, confidence and happiness.

Our clients regularly tell us their financial plan provides comfort during difficult times because it considers their whole life. Statistically, as we’ve mentioned in earlier articles, those who are financially ‘advised’ compared to ‘non-advised’ are on average 5.2% per annum better off. [4]

And, that can represent a significant amount of money and financial resources over the course of a lifetime.

Next Steps
For our Stratus clients reading this article, we remind you to immediately let us know when your life takes a turn – for better or for worse. This enables us to make adjustments that might be necessary for you to stay the course of your financial plan or to implement other strategies.

May we also invite you to pass this article on to those closest to you who could benefit from the type of financial advice and support you’ve experienced yourself.

We know the past couple of years have been tough. We understand having an opportunity to talk through financial worries is a valuable first step in regaining financial control and confidence. We’d like to help.

For more information about financial planning and modelling please contact Brett Cribb, Steve Nicholas or James Marshall  on +61 (0)7 3007 2007 or email info@stratusfinancialgroup.com.au.

Stratus Financial Group helps professionals, executives, business owners, families and retirees manage their complex financial affairs and coordinate their professional advisers.

Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. This is general advice only and does not take into account your objectives, financial situation or needs, so you should consider whether the advice is relevant to your personal circumstances. You should also read the relevant Product Disclosure Statements (PDS) before making any financial decisions.