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Life – How long do you have to live?

Article By Janik Hrabovcak | | Financial Planning

There are many uncertainties when it comes to planning retirement.  One of the biggest risks are outliving your retirement funds (i.e. you run out of money but still have years until you kick the bucket.)

How long are you expected to live?

According to the 2015 Intergenerational Report – (Australia in 2055, The Treasury, The Australian Government, March 2015), you have quite a long time to live once you retire.  In this table, life expectancy is reported using the cohort method. The cohort life expectancy method takes into account assumptions of improvements in mortality rates over people’s lifetimes, and therefore takes a better account of increasing life expectancy trends over time. These projections assume ongoing changes in lifestyles and advances in medicine and technology will continue to improve life expectancy in the future.

As you can see from the above, if you were to retire at age 60 you would expect to live for another 26.4 years (Men) and 29.1 years (Women). 

This is projected to go up over time, i.e. if you turned 60 years old in 2055 than it is estimated that you would live for another 31.5 years (Men) and 33.3 years (Women). 

Retirement – How do you wish to spend it?

If you have not planned/saved for retirement, fortunately as an Australian you can currently rely on the Centrelink Aged Pension, however this will only entitle you to $34,800 p.a. max as a couple or $23,000 p.a. as a single person (if eligible).  One of the most common questions I ask clients would be – Will the Centrelink Age Pension be enough to cover your retirement needs?  If the answer is no, then we would need to start an action plan so that they would have the best chance to retire on an income which can sustain their desired retirement lifestyle.

If you are wishing to review/plan your financial future or perhaps just want a free financial health check, please get in contact with one of our Altitude Advisers.


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