Would you like to live to 100?
When we start building a financial plan for a client, our starting assumption is that they will.
It often creates a light-hearted moment.
“100? What on earth am I going to do with all that extra time?”
It’s a better question than it sounds.
Because financial planning isn’t really about making your money last until 100. It’s about making sure you can live well for however long you have.
And increasingly, that might be rather longer than we once imagined.
100 isn’t quite as unusual as it used to be
In 1917, the first year a royal telegram was sent to people reaching their 100th birthday, King George V sent just 24.
Fast-forward a century and the picture looks very different.
The number of people reaching 100 has risen dramatically. Improvements in healthcare, nutrition and living standards mean more of us are living well into our 80s, 90s and beyond.
Of course, average life expectancy is still some way short of 100. But averages also hide a huge variation between individuals.
Your health, lifestyle, wealth, family history and, frankly, a little bit of luck can make a considerable difference.
That's why, when we're creating someone's financial plan, planning to 100 isn't a prediction.
It's a precaution.
I'd much rather your money outlast you than the other way round.
If you're curious, the ONS life expectancy calculator is worth a look.
But how long you live is only the beginning of the conversation.
Lifespan, health span and joy span
We all understand lifespan, the number of years we're alive.
Then there's healthspan: the number of those years we spend in reasonably good health.
American gerontologist Kerry Burnight introduces another lovely idea: joy span, the years in which we still experience real enjoyment, connection and meaning.
I think that's an important distinction.
Most of us don't simply want more years.
We want more good years.
Years when we're healthy enough to travel, play with grandchildren, learn something new, enjoy friends, contribute, explore and still have a reason to get out of bed in the morning.
And the three are interconnected.
Looking after our health makes it easier to do the things we enjoy. Staying connected to other people helps give life meaning. Remaining curious and active gives us reasons to keep going.
So perhaps longevity planning shouldn't simply be about extending lifespan.
Perhaps the real objective is extending health span and joy span alongside it.
The old three-stage life is disappearing
For generations, life followed a reasonably predictable pattern:
Education. Work. Retirement.
Then came The 100-Year Life by Lynda Gratton and Andrew Scott, which challenges the idea that this traditional three-stage life still makes sense when many of us may live considerably longer.
A 30-year retirement is quite different from the retirement our grandparents planned for.
And increasingly, retirement isn't even a single event.
Some people gradually reduce their hours. Others change career, start businesses, mentor, volunteer, retrain or pursue something they've always wanted to do.
Some stop working altogether.
Others discover that after six months playing golf, they actually quite miss having something to do.
Sonya Lennon, who works with people navigating these transitions, describes some retirement conversations as “life questions wearing a retirement costume.”
I rather like that.
Because underneath the question “Can I afford to retire?” is often something much bigger:
“What do I want the next chapter of my life to look like?”
What does living to 100 mean for your money?
This is where financial planning becomes important.
If your money potentially needs to support you for 30 or 35 years after you stop working, plenty can happen along the way.
Markets will rise and fall.
Inflation will surprise us.
Tax rules will change.
Your spending will change.
And, most importantly, you will change.
That's why we don't build a financial plan around one neat prediction of the future.
We use our FutureMap cashflow modelling to explore a range of possibilities and keep updating the plan as life unfolds.
But planning to 100 shouldn't mean hoarding every penny because you're terrified of running out.
Quite the opposite.
A good financial plan should give you permission to spend.
Your healthy years are precious. They may be the time to travel, help the children, take up something new, buy the ridiculous car or simply spend more time doing the things you love.
There's little point reaching 100 with the biggest possible bank balance if fear of the future stopped you enjoying the preceding 30 years.
Giving money away while you can enjoy it
Longevity also changes the conversation around family.
Many clients want to help their children and grandchildren, but inevitably ask:
“How much can I afford to give away without risking my own future?”
That's exactly the kind of question long-term cashflow planning can help answer.
Lifetime gifting can bring enormous pleasure. You get to see what the money actually does.
It may help with a house deposit, education or simply make life a little easier for the next generation. In some circumstances, lifetime gifting can also form part of sensible inheritance-tax planning.
But there is an important principle here:
Giving is easy. Ungiving is rather more difficult.
Before giving significant amounts away, we need to understand what you might need yourself, particularly if life lasts longer than expected or later-life care becomes necessary.
Money isn't your only asset
Perhaps my favourite idea from The 100-Year Life is that our financial assets aren't the only things we need to invest in.
Gratton and Scott talk about “intangible assets”: our health, friendships, family relationships, knowledge, skills and sense of purpose.
Like money, those assets can compound if we invest in them.
And they can diminish if we neglect them.
Kerry Burnight describes four habits associated with thriving in later life:
Growing. Connecting. Adapting. Giving.
None necessarily requires much money.
But all four require time and attention.
And that brings us back to financial planning.
What is the money actually for?
When we first meet a new client or family, we often spend quite a lot of time talking about things that don't sound particularly financial.
Who matters to you?
What do you enjoy?
What would you regret not doing?
Who might you like to help?
What would a really good retirement look like?
And perhaps most importantly:
What do you want your time to be for?
Eventually, of course, we get to pensions, investments, tax, cash flow and all the numbers.
But the numbers aren't the plan.
They're there to pay for the plan.
So the next time a client laughs when I tell them we're planning on the basis that they'll live to 100, I'll take that as the beginning of a much more interesting conversation.
Because maybe the real question isn't:
“Will I live to 100?”
It's:
“If I did, what would I want to do with all those extra years?”
And perhaps that's worth thinking about long before your 100th birthday card arrives.
So, what are you doing to improve your lifespan, health span and joy span? I'd love to hear your thoughts in the comments or via the button below.
