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Life expectancy figures show that most people today can look forward to significantly longer lives than in any previous generation. This is due to many factors, not least of which include advanced medical care, greater health awareness and improved nutrition. Whilst living longer is undoubtedly good news, it does present challenges when it comes to retirement planning. Most people underestimate their own life expectancy and many financial planners can also fall into the same trap.
Poverty in retirement is a nightmare that few expect; especially if they enjoy a good standard of living while working. However, it is becoming a very real consequence for people of all income groups because poor retirement planning does not account for increased life expectancy.
The Society of Actuaries in North America recently released data showing that for a married couple reaching the age of 65, there is now a 1% chance that one of the couple will attain the ripe old age of 107. This extraordinary statistic becomes more relevant when you consider that there is a 10% likelihood that one person in any couple now reaching retirement age will reach the age of 100. The real cause for concern is that retirement planning is often based upon between only 10 to 20 years of retirement. This makes the possibility of being left with a shortfall of 20 to 30 years in retirement income very real.
Solid retirement planning is essential to ensuring a financially secure retirement. A well planned, diversified investment portfolio supported by good advice and professional management can be relied upon to provide a pension that will last for a lifetime. Retirement planning should be based on an overestimation of life expectancy because if it is calculated on the average, there is a 50% chance that many people will outlive their pension fund. Despite the importance of this issue, it is frequently neglected in retirement plans thereby running the risk of hardship and poverty old age. It is an awful prospect, but one which can be addressed by good advice and professional and experienced retirement planning.
Tax efficient international investment opportunities available to expats in Asia place many people in an excellent position to achieve a financially secure retirement. However, underestimating life expectancy can still undermine what appears to be a reliable plan. Our professional advisers are able to assist with expert retirement planning. Contact us at Infinity to make sure that your retirement planning is on track.