Retirement income planning made the news this week, with one report about the amount people spend in retirement, and another about life expectancy hitting the headlines.
There are two competing risks in retirement: Death and Financial Ruin. One or the other is going to catch up with you eventually! That’s why it’s important for your planner to have a good understanding of life expectancy and how it might affect you.
So, my ears pricked up when I heard that a new study by academics at University College, London had been published in the Lancet, which showed that life expectancy had reduced in certain parts of the UK.
The researchers tracked life expectancy and found that it has been declining, in many communities, for years before the pandemic began. From 2014-2019, life expectancy declined for women in almost one in five communities, and in one in nine communities for men.
Looking on the bright side, this suggests that you can worry less about Financial Ruin.
But the headlines do need a bit more examination. In the places where life expectancy has declined, between 2014-19, life expectancy declined by two months for women, and around a month and a half for men. This is hardly earth shattering news and it led me to look at the figures a bit more closely.
The areas where there were decreases in life expectancy often already had lower life expectancy, and high levels of poverty, unemployment, and low education. And they were in the North of England.
In comparison, between 2002 and 2019, life expectancy increases of nine years or more were seen for men and women in some parts of London. The research shows that, for almost all of our part of the country, life expectancy has increased for both women and men. It is shocking, however, to see that there are growing differences in life expectancy in England with poverty, unemployment and low education being closely linked with shorter lives.
The way in which the statistics were compiled is important. The researchers looked at where people died, as opposed to where people lived. This was a relief for my wife, who was born in Blackpool, which has one of the lowest life expectancies in England. If you move (or are moved) to one of these areas, then this could mean you will have a shorter life expectancy than the rest of the country. I’ll let you reach your own conclusions about why this might be. However, if you were born in Blackpool and subsequently move away, your life expectancy should be no lower than anyone else’s. That’s good news for Louise!
What does this mean for your retirement income plan? If you live in our part of the country, you’ll need a little bit more money before you can retire comfortably.
If Bad News is your thing, you’ll be disappointed that you can’t tell people that your life expectancy is shorter, but, thanks to our two competing risks, you will be able to tell people that the risk of Financial Ruin during your lifetime has increased!
Philip Wise | email@example.com
Managing Director and Chartered Financial Planner