On a recent holiday, I read “The 100 year Life” by Gratton and Scott, two UK academics whose book is rapidly becoming a must-read.

I have five grandchildren between the ages of two and five, and their lifespan could be very long indeed.

For children born in the West today, there is more than a 50 percent chance of living to be over 105.  A century ago, there was less than a one percent chance of living to that age.

This is not science fiction. If you are now 20 you have a 50 percent chance of living to 100. If you are now 40 you have an even chance of reaching 95. If you are now 60 you have a 50 percent chance of reaching 90 or more.

Q.  Is this a blessing or a curse?

AA blessing according to the authors. Healthier lifestyles and rapid progress in medical treatments mean that many of today’s later onset illnesses will be controlled or disappear.

Q.  How do you plan for such a long lifespan?

A.   That’s the 64,000 dollar question. Without realising it, we are used to thinking of life in three stages. Growing up and education to about the age of 20; then working to 60-65; then retiring and enjoying our free time, until frailty and ultimately our death. Our time in this last stage is changing compared to our parents and grandparents. We are expecting to live many years beyond our retirement compared to previous generations.

However, pensions were only ever meant to pay out for 10-15 years. As we saved through 40 years or more of our working life, it was achievable to fund our initial expectations of retirement. So how do we fund another 40 further years beyond work; our longer than expected years of retirement?

Reality shows that many of today’s 60 to 80 year olds are not retiring. Many continue to work, often part-time. They sell the skills they have built over the years and enjoy the best of both worlds. Flexible pensions allow them to take a smaller part of their pension and add earned income. They enjoy the sense of purpose of continued working, the social interaction with business colleagues, a satisfactory income, and yet still have some time to relax.

This is the new world of 60-80 year olds today. They need professional financial planning assistance to get this programme in motion. Government policy is behind the curve, it must catch up. Once you have drawn down even a small part of your retirement pension then incredibly low new pension contribution limits apply. Why shouldn’t you be able to top up your pension pot again?

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