On 1 January 2025, the seminal director, Robert Eggers, released his remake of the 1922 silent horror film, Nosferatu.
The original film is often regarded as one of the most influential horror movies of all time, and Eggers’ reimagining has breathed new life into the classic, raising questions about life and longevity.
While the iconic vampire may not have had to deal with the challenges of a long retirement, his immortality undoubtedly required meticulous planning for the future.
Similarly, rising life expectancies bring their own set of complexities that require careful financial foresight.
Indeed, thanks to advancements in medicine, a greater awareness of healthy lifestyles, and improved living conditions, the Office for National Statistics (ONS) reveals that, between 2021 and 2023, life expectancy at birth in the UK was 79 years for men and 83 for women.
Moreover, additional ONS data shows that there were an estimated 14,850 centenarians in England and Wales in 2023, more than double the number in 2002.
These figures highlight the fact that your retirement could last for 20, 30, or even 40 years. While this is undoubtedly positive, it also means that it’s vital to carefully consider your retirement plan to ensure your long-term financial security.
Continue reading to discover why this is the case, and how financial advice could help.
You could end up with a financial shortfall if you fail to plan for a longer retirement
Failing to account for a longer life in your retirement plan could have considerable repercussions. This is because a shortfall in savings could affect your standard of living later in your life, potentially leaving you unable to achieve your long-desired goals.
Whether you dream of travelling the world, renovating your home, or simply spending time with your loved ones, these goals will likely guide your retirement plan.
Though, even with clear targets in mind, accurately estimating your retirement income needs can be challenging.
Unexpected expenses, fluctuating investment performance, and inflation could all disrupt your calculations.
This is where professional financial advice becomes invaluable. A planner can create a balanced investment strategy tailored to your specific circumstances by considering factors such as:
- Your risk tolerance
- Existing assets
- Any future plans
- Your retirement time frame.
Additionally, planners can use sophisticated cashflow forecasting tools to help you visualise your income and expenditure throughout retirement.
This can help you to understand the potential effects of any decisions you make, and how adjustments to your risk profile or time frame might influence your overall returns.
Just as Nosferatu’s centuries-long existence likely required adaptability to unforeseen events, your retirement plan should also remain flexible to accommodate any changes.
Your income needs will likely evolve throughout retirement
Your retirement will likely encompass several distinct stages, each with its own unique financial requirements.
Indeed, during the early years of retirement, you may lead more of an active lifestyle, incurring higher expenses as you pursue big-ticket items on your bucket list. However, as time progresses, your income needs may decrease as you start to slow down somewhat.
Then, as you enter the later stages of your retirement, costs could rise again, particularly if you require later-life care (more on this later).
This bell curve of expenditure shows the importance of planning for your entire retirement. Failing to account for these shifting income needs could result in a shortfall when you need money the most.
What’s more, pension decumulation – the process of converting your pension assets into income – requires careful management, as drawing excessive amounts in the early years could deplete your fund prematurely, leaving you financially vulnerable later in life.
Thankfully, a financial planner could help you devise a sustainable withdrawal strategy to ensure a steady stream of income throughout your retirement.
They may suggest options such as using a lump sum to pay for significant one-off expenses while securing a guaranteed income through an annuity to cover fixed costs and provide stability.
It’s vital to factor in later-life care contingencies
As mentioned, the likelihood of needing to pay for later-life care could rise as you get older, making it essential to incorporate these potential costs into your retirement plan.
For instance, you may choose to adapt your home for accessibility or downsize to a smaller property, freeing up funds to supplement your income.
However, if your health deteriorates and you need to move into a residential care or nursing home, the costs can be significant.
Carehome.co.uk reveals that the average weekly cost of residential care for self-funders is £1,160, while nursing home costs average £1,410 a week. This equates to £60,320 and £73,320 a year, respectively.
If you don’t plan for these costs, you could face a financial shortfall when you need the funds the most.
It’s equally important to decide how to manage any money you’ve earmarked for care if you end up not needing it.
Without the proper planning, your loved ones could face a higher Inheritance Tax liability on your estate. As such, strategies such as gifting or establishing trusts could help mitigate this risk and ensure tax efficiency.
Unlike Nosferatu, who likely never had to consider later-life care, it’s vital to navigate these complexities.
Financial advice could provide a bespoke strategy tailored to your circumstances, enabling you to protect your financial future and achieve some much-needed peace of mind.
By assessing your financial situation and creating a comprehensive retirement plan, you might be able to confidently prepare for the challenges of a long life.
Get in touch
We could help you accurately plan for a longer life so you’re safe in the knowledge that your pension fund will be able to support your dream retirement.
Please email us at info@investmentsense.co.uk or call 0115 933 8433 to find out more.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The Financial Conduct Authority does not regulate estate planning, cashflow planning, tax planning, or trusts.
