Why Understanding Life Expectancy & Longevity Risk Matters
Do you know that according to the Office for National Statistics 2019, a 25 year old male now has a 25% chance of living to age 98 and a 25 year old female a 25% chance of living to 100?
This short video discusses why it’s important to understand longevity risk, especially when planning financially for your future.
A video transcript is provided further below, if you would prefer to read about it.
Why Understanding Life Expectancy & Longevity Risk Matters – Video Transcript
When you are making your financial plans, you may be encouraged to find out your life expectancy.
Yet, your life expectancy is of limited value in financial planning.
It’s very useful for a life assurance company or a pension provider but not so much for you.
That’s because life expectancy is an average based on lots of people.
What IS important in your world is to understand longevity, which is defined as ‘living a long time’.
And in this respect, here are some fascinating recent statistics for you to consider:
You will see the prospects for any one individual of living for a very long time are high and if you are a couple planning your finances these are even more pronounced.
The lesson here is that you cannot know if you will be below average, average or above average in terms of your lifespan.
Your plans should assume you are going to live a long time, because if you work to the average (the life expectancy) but turn out to live longer than average your plans might fail, which could include running out of money in your later years.
Your financial planning should cater for longevity because there is a very good chance you will live much longer than your life expectancy.
Will your pension and savings be sufficient to see you through your retirement?
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To speak to an IFA about life expectancy and longevity risk, contact Tony Thomas on 07585 592494 or firstname.lastname@example.org