Living Longer in Retirement

Written on the 25 May 2022 by Parkside InvestorPlus

It seems Australians are now living longer in their retirement phase than ever before.

In Australia, the average life expectancy of both males and females is now over 84 years of age, considering that at the start of the 20th century, the average life expectancy for both males and females was around 57 years!

Why are we living longer?  Primarily due to improvements in medical and lifestyle options.

Australians are lucky to be living in a country with one of the highest life expectancies at birth in the world, trailing Japan, Switzerland, Singapore, Spain, and Italy.

However, this good news is a two-edged sword.

If you’ve chosen to retire at the spritely age of 65, then chances are (very high chances), you will live for another 15+ years – specifically, if you are a male, you can expect to live for another 20 years and if you’re female, another 23 years.

The impact of living longer in retirement

Without a doubt, two of the biggest concerns for retirees are:

1.       Will I have enough money in my retirement

2.       Health care

Will there be enough in the ‘super tank’?

Despite having one of the best superannuation schemes in the world, research has shown that there is a gap for many retirees, and savings don’t keep pace with longevity, which means some will run out of money – especially now given the rising cost of living expenses.

It’s reported that 1 in 4 Australians are expected to outlive their savings by more than 10 years, with a retirement savings shortfall of around $187,200 per person.

Worrying that your money will run out in your retirement is one of the biggest concerns of pre-retirees and retirees.

This is where sound advice around the following areas is a key, ideally before retirement;

• Transition into retirement
• Investing strategies for your pension
• Budgeting in retirement
• Tax minimisation strategies
• Age Pension and other social security entitlements and safety net

Aged care needs

As you get older, it can be more difficult to do those day-to-day things on your own.

For example, you may need help with cleaning, attending doctor’s appointments or even just moving about.

Aged care is the support provided to older people who need help in their own home or who can no longer live at home.

Examples of aged care includes;

• Help with housework, shopping, cooking or just going out
• Any assistance with mobility such as walking frames or motorised scooters
• Modifications to the home to assist with mobility such as ramps, handrails or even stair lifts
• Personal care – dressing, eating, bathing, going to the toilet
• Health care – nursing, physio, and medical care
• And of course, accommodation if living in your own home is no longer an option

Just from the list above, you start to understand that there are costs associated with each of these requirements.

It’s vitally important to ensure that the right amount of aged care costs have been factored into your later life financial planning.

Unfortunately, though, as we’ve seen from the critically low number of Australians who are financially prepared for aged care, the vast majority will fall short.

If you are a pre-retiree or have just entered your retirement phase, Parkside InvestorPlus will provide you with valuable advice to maximise your next phase life.

We have a qualified specialist in this area and who will provide the right advice for your needs.

You can contact us or call us on (02) 9899 4899.