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  • FIRST POST
    • JoeEngland
    • By JoeEngland 11th Jul 18, 8:05 PM
    • 180Posts
    • 269Thanks
    JoeEngland
    What age to plan living to
    • #1
    • 11th Jul 18, 8:05 PM
    What age to plan living to 11th Jul 18 at 8:05 PM
    My spreadsheet goes up to when I'm 90, not because I expect to live that long but because DW is 4 years younger. This seems to fit in with advice on here to plan finances until age 85-90. Since none of us know how long we'll live, this study may help think about what age to plan to:

    https://www.google.co.uk/url?sa=t&source=web&rct=j&url=http://www.elsa-project.ac.uk/uploads/elsa/report08/ch8.pdf&ved=2ahUKEwinr5jC3JfcAhUrCMAKHbx2Bf0QFjAHe gQIBRAB&usg=AOvVaw1mvnxMseJ5XrLpyMzv_Ykv
Page 1
    • hugheskevi
    • By hugheskevi 11th Jul 18, 8:19 PM
    • 2,075 Posts
    • 2,645 Thanks
    hugheskevi
    • #2
    • 11th Jul 18, 8:19 PM
    • #2
    • 11th Jul 18, 8:19 PM
    I find the Regulator's Scheme Funding statistics is a handy reference.


    Pages 18 and 19 show the assumptions Defined Benefit schemes are using about mortality in convenient charts.


    It looks like this year only covers 45 year olds, previous years covered both 45 and 65 year olds.
    • kidmugsy
    • By kidmugsy 11th Jul 18, 10:13 PM
    • 12,176 Posts
    • 8,617 Thanks
    kidmugsy
    • #3
    • 11th Jul 18, 10:13 PM
    • #3
    • 11th Jul 18, 10:13 PM
    99 for my widow, a week next Tuesday for me.
    Free the dunston one next time too.
    • Brynsam
    • By Brynsam 12th Jul 18, 1:20 AM
    • 1,740 Posts
    • 1,275 Thanks
    Brynsam
    • #4
    • 12th Jul 18, 1:20 AM
    • #4
    • 12th Jul 18, 1:20 AM
    Try http://deathclock.com
    • MallyGirl
    • By MallyGirl 12th Jul 18, 10:57 AM
    • 3,122 Posts
    • 8,156 Thanks
    MallyGirl
    • #5
    • 12th Jul 18, 10:57 AM
    • #5
    • 12th Jul 18, 10:57 AM
    Originally posted by Brynsam
    I am hoping that one is a bit pessimistic as it says I will be dead before 80 and that is certainly not my intention!
    I'm a Board Guide on the Debt-free Wannabe, Loans & Credit Cards boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Board guides are not moderators and don't read every post. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com
    Any views are mine and not the official line of MoneySavingExpert.com.
    • bolwin1
    • By bolwin1 12th Jul 18, 11:40 AM
    • 20 Posts
    • 43 Thanks
    bolwin1
    • #6
    • 12th Jul 18, 11:40 AM
    • #6
    • 12th Jul 18, 11:40 AM
    Try deathclock com
    Originally posted by Brynsam
    I don't think that site is right (or at least hope not). At the age of 53 & in decent health, it has me shuffling off at 74, whereas other sites assume mid 80s. Maybe it thinks we live in Somalia....
    • Aegis
    • By Aegis 12th Jul 18, 11:49 AM
    • 5,002 Posts
    • 3,269 Thanks
    Aegis
    • #7
    • 12th Jul 18, 11:49 AM
    • #7
    • 12th Jul 18, 11:49 AM
    My spreadsheet goes up to when I'm 90, not because I expect to live that long but because DW is 4 years younger. This seems to fit in with advice on here to plan finances until age 85-90. Since none of us know how long we'll live, this study may help think about what age to plan to:

    https://www.google.co.uk/url?sa=t&source=web&rct=j&url=http://www.elsa-project.ac.uk/uploads/elsa/report08/ch8.pdf&ved=2ahUKEwinr5jC3JfcAhUrCMAKHbx2Bf0QFjAHe gQIBRAB&usg=AOvVaw1mvnxMseJ5XrLpyMzv_Ykv
    Originally posted by JoeEngland

    In the absence of any other factors, I usually plan through to age 100 for my clients, and will also look at the possibility of up to five years in a care home as well. It's a very pessimistic view indeed, but it's designed to show just how unaffordable retirement can end up being if costs aren't controlled in the early years.


    Remember that things like actuarial tables and ONS life expectancy figures are dealing with large populations, which tend towards a somewhat predictable distribution. A single individual is much more difficult to predict, and can end up falling at either end of a population distribution. Only planning to the average would give you a 50% chance of being financially unprepared to live to your actual date of death.
    I am an Independent Financial Adviser
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
    • OldMusicGuy
    • By OldMusicGuy 12th Jul 18, 11:56 AM
    • 641 Posts
    • 1,392 Thanks
    OldMusicGuy
    • #8
    • 12th Jul 18, 11:56 AM
    • #8
    • 12th Jul 18, 11:56 AM
    In the absence of any other factors, I usually plan through to age 100 for my clients, and will also look at the possibility of up to five years in a care home as well. It's a very pessimistic view indeed, but it's designed to show just how unaffordable retirement can end up being if costs aren't controlled in the early years.
    Originally posted by Aegis
    Similar for me. My spreadsheet goes to age 93 and the plan is to have enough money left at that age to cover at least 5 years in a care home, assuming only one of us is left. Of course, if my wife or I go earlier then plans will change. If we both need to go into a care home that may be a bit tougher.
    • bertiewhite
    • By bertiewhite 12th Jul 18, 12:51 PM
    • 1,376 Posts
    • 1,565 Thanks
    bertiewhite
    • #9
    • 12th Jul 18, 12:51 PM
    • #9
    • 12th Jul 18, 12:51 PM
    I'm aiming for 93 as that's the age my paternal Grandfather died, my great Grandfather lived to be 96 and I've tended to take after that side of the family rather than my Mother's side.
    • PasturesNew
    • By PasturesNew 12th Jul 18, 12:52 PM
    • 65,220 Posts
    • 382,740 Thanks
    PasturesNew
    That death clock gives me 15 more years.
    I think it's probably a little upbeat and optimistic.
    • JoeEngland
    • By JoeEngland 12th Jul 18, 1:19 PM
    • 180 Posts
    • 269 Thanks
    JoeEngland
    In the absence of any other factors, I usually plan through to age 100 for my clients, and will also look at the possibility of up to five years in a care home as well. It's a very pessimistic view indeed, but it's designed to show just how unaffordable retirement can end up being if costs aren't controlled in the early years.


    Remember that things like actuarial tables and ONS life expectancy figures are dealing with large populations, which tend towards a somewhat predictable distribution. A single individual is much more difficult to predict, and can end up falling at either end of a population distribution. Only planning to the average would give you a 50% chance of being financially unprepared to live to your actual date of death.
    Originally posted by Aegis

    I posted the link because it shows how various factors such as marital status can affect life expectancy and so give people a better idea of how long they might live. Ultimately it comes down to a personal decision about what's most important. Do you work until you can no longer do so just to build up even more money just in case you live to 100 and/or need money to pay for a nursing home, or do you take a risk to really live life by retiring earlier but not have guaranteed funds until you're 100? TBH I find the idea of working into my 60s, even assuming I physically could, to be utterly depressing and therefore plan to retire early with a feasible but modest financial plan.
    • ColdIron
    • By ColdIron 12th Jul 18, 1:39 PM
    • 4,839 Posts
    • 6,405 Thanks
    ColdIron
    Originally posted by Brynsam
    Monday, August 6, 2018 - ooh errr

    But then I noticed that the death date changes every time you press the button

    Phew
    • kidmugsy
    • By kidmugsy 12th Jul 18, 2:10 PM
    • 12,176 Posts
    • 8,617 Thanks
    kidmugsy
    If we both need to go into a care home that may be a bit tougher.
    Originally posted by OldMusicGuy
    That's the problem that's got me stumped. If I die quickly and cheaply my widow should be OK even if she later has to spend a few years, demented, in a care home. At the last resort the house will pay for it.

    But if I, say, have a bad stroke and have to go into care for a few years then she might struggle to get by. Perhaps equity release will come to the rescue. How easy is it to do equity release when a tenants-in-common co-owner is drooling in a care home?
    Free the dunston one next time too.
  • jamesd
    In the absence of any other factors, I usually plan through to age 100 for my clients, and will also look at the possibility of up to five years in a care home as well. It's a very pessimistic view indeed, but it's designed to show just how unaffordable retirement can end up being if costs aren't controlled in the early years.
    Originally posted by Aegis
    Hard for me to think of that as anything other than you being likely to be doing harm to your clients.

    Initially, for the population as a whole, there's less than a one in ten chance of living to 100. But if you require this in planning, you're going to be requiring them to work longer and hence spend fewer healthy years in retirement.

    There are some significant mitigating factors,though. Notably that your clients are likely to be in the top quintile of wealth (about 300k and up) and well into that, so they are both likely to live longer than usual and to need to work fewer extra years to reach targets.

    I also don't know how you handle the discussion of the trade-offs between more accumulation and fewer healthy years in retirement. It's one of the more interesting challenges to balance the certainty of one less retired year, probably in good health, with low probability spending events like years 95 to 100 in privately funded care. That's around one in four chance of being alive at the start, one in three of ever needing care and only two years normal care need. That ends up as a pretty low expected value for the provision.

    Then there's investment returns. Compared to 100% success safe withdrawal rates, even average returns would leave lots of extra money. So depending on how you handle this you might also be planning for very low probability returns.

    Of course you'll also have some clients who have both ample wealth and a strong inheritance provision desire. For them, planning for low probabiirty events has higher inheritance as the most likely result and they may be entirely happy with that.

    These considerations of the balancing of provision for low probability outcomes vs less healthy retired years are perhaps the most challenging in the field. There's no one right answer.
    Last edited by jamesd; 12-07-2018 at 3:14 PM.
    • Aegis
    • By Aegis 12th Jul 18, 3:22 PM
    • 5,002 Posts
    • 3,269 Thanks
    Aegis
    Hard for me to think of that as anything other than you being highly likely to be doing substantial harm to your clients.
    Originally posted by jamesd

    The simple answer is that I would rather a client over-prepare than under-prepare. I can't know with any degree of certainty when they will die, nor can they. What I can do is work in a financially very pessimistic view of how long the money needs to last, coupled with a large expense at the end of their lifetime. In many cases this highlights a potential weakness in their plan rather than pushing them into a strategy such as retiring much later, making them realise that they might not have a level of assets that allows them to gift away large proportions of their estate for IHT planning purposes, for example.


    In other cases, the client may realise that their liquid assets may be risky, but that their property is still available. They may consider whether the 20,000 holiday a year is necessary, or whether they can instead cut that to a still-enjoyable 15,000 and increase the longevity of their plans.


    Alternatively they may indicate that they only want to make sure they have enough left for a one-way ticket to Switzerland if they ever need to go into long-term care.


    Overall, it's a planning exercise and it needs an appropriate safety net, and that's the one I've chosen to use for my clients (again, in the absence of any other factors).


    Initially, for the population as a whole, there's less than a one in ten chance of living to 100. But if you require this in planning, you're going to be requiring them to work longer and hence spend fewer healthy years in retirement.
    To put it another way, one in 10 of my clients is expected to outlast even age 100, therefore they should be planning as thought this is a distinct possibility.


    There are some significant mitigating factors,though. Notably that your clients are likely to be in the top quintile of wealth (about 300k and up) and well into that, so they are both likely to live longer than usual and to need to work fewer extra years to reach targets.

    I also don't know how you handle the discussion of the trade-offs between more accumulation and fewer healthy years in retirement. It's one of the more interesting challenges to balance the certainty of one less retired year, probably in good health, with low probability spending events like years 95 to 100 in privately funded care. That's around one in four chance of being alive at the start, one in three of ever needing care and only two years normal care need. That ends up as a pretty low expected value for the provision.
    True, but the old adage "failure to plan is planning to fail" springs to mind whenever I think about the low-probability nature of the care home scenario. Assume you have 100 clients. One in four reaches age 95, so that's 25. If one in three of those clients needs care, that's eight. Of those, four are expected to need more than two years' worth of care fees. I'd be absolutely livid with myself if I knew that four of my clients had ended up in that set of circumstances without planning for it, and I'll therefore talk through the benefits of over-planning and let them make the decision of how much of a safety net they want to build in to their plan.


    Then there's investment returns. Compared to 100% success safe withdrawal rates, even average returns would leave lots of extra money. So depending on how you handle this you might also be planning for very low probability returns.
    We tend to default to 1% over inflation for pessimistic plans and 3% over inflation for optimistic. This can be modified down to account for clients with very limited risk tolerance, and we also tend to incorporate at least one market shock when planning, to show what might happen with sequencing risk.


    Of course you'll also have some clients who have both ample wealth and a strong inheritance provision desire. For them, planning for low probabiirty events has higher inheritance as the most likely result and they may be entirely happy with that.
    Admittedly, most of my later-life clients fall into this category. That might well bias my approach towards the wealthier end of the spectrum.


    These considerations of the balancing of provision for low probability outcomes vs less healthy retired years are perhaps the most challenging in the field. There's no one right answer.
    Agreed - it's a monumental pain trying to work out the right approach for each case, which is why we as a firm decided that these defaults should be used unless we have a good reason to override them.
    I am an Independent Financial Adviser
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
    • mgdavid
    • By mgdavid 12th Jul 18, 4:16 PM
    • 5,834 Posts
    • 5,178 Thanks
    mgdavid
    .......... How easy is it to do equity release when a tenants-in-common co-owner is drooling in a care home?
    Originally posted by kidmugsy

    Isn't this where LPAs come in?
    The questions that get the best answers are the questions that give most detail....
    • lisyloo
    • By lisyloo 12th Jul 18, 4:29 PM
    • 22,838 Posts
    • 11,400 Thanks
    lisyloo
    Isn't this where LPAs come in?
    If they make the LPA before they are drooling (which I interpret as lost the capacity to make decisions).
    Otherwise someone has to apply to the court of protection to deputyship (I'm doing this right now) and that deputy has to be sure that they are acting in the best interests of the person they deputise for, which makes it difficult to make any risky or potentially contencious decisions.
    • grey gym sock
    • By grey gym sock 12th Jul 18, 5:14 PM
    • 4,444 Posts
    • 3,997 Thanks
    grey gym sock
    there are 2 parts to planning retirement spending: basic spending, and the possibility of paying for a care home.

    so far as basic spending goes, you can't estimate you'll live to (say) 90, and plan to run out of capital then. that's crazy, because you could easily live past that age. you either need to plan based on a very high age (100 or more) or just not plan to run out of capital at all, or you need to plan to buy an annuity (though you don't have to buy it when you retire - you could do it significantly later on, when your life expectancy is lower, hence annuity rates higher). a lot of people seem to hate annuities, but they're actually a great tool for the job of ensuring you have a decent income for live without over-saving. learn to love annuities, i say!

    for care homes, is there no insurance available to cover this (for younger retirees, who don't yet need a care home)? i know there are "immediate care needs" annuities for people entering a care home. but surely earlier insurance would be quite cheap, given the low probability of entering a care home?

    it's outside the scope of the self-help solutions usually discussed on MSE, but a better still solution would be to elect a socialist government which would introduce a National Care Service, similar to the NHS, i.e. free to all and paid for out of general taxation. this would be affordable for the same reason that early insurance ought to be relatively cheap - i.e. it's a low-probability event, with the cost spread (in this case) across the whole population.

    if, or for so long as, neither of the above 2 solutions are available, then wealthier people will probably want to plan to be able to pay for a care home. less wealthy people may decide that's unrealistic, and hope that State provision will be adequate if they need it.
    • OldMusicGuy
    • By OldMusicGuy 12th Jul 18, 5:24 PM
    • 641 Posts
    • 1,392 Thanks
    OldMusicGuy
    you either need to plan based on a very high age (100 or more) or just not plan to run out of capital at all, or you need to plan to buy an annuity (though you don't have to buy it when you retire - you could do it significantly later on, when your life expectancy is lower, hence annuity rates higher). a lot of people seem to hate annuities, but they're actually a great tool for the job of ensuring you have a decent income for live without over-saving. learn to love annuities, i say!
    Originally posted by grey gym sock
    I will definitely be converting capital to annuities later in life on a phased basis. As you say, it's a way of ensuring a risk free income stream without leaving unused capital.
    • JoeEngland
    • By JoeEngland 12th Jul 18, 5:57 PM
    • 180 Posts
    • 269 Thanks
    JoeEngland
    there are 2 parts to planning retirement spending: basic spending, and the possibility of paying for a care home.

    so far as basic spending goes, you can't estimate you'll live to (say) 90, and plan to run out of capital then. that's crazy, because you could easily live past that age. you either need to plan based on a very high age (100 or more) or just not plan to run out of capital at all, or you need to plan to buy an annuity (though you don't have to buy it when you retire - you could do it significantly later on, when your life expectancy is lower, hence annuity rates higher). a lot of people seem to hate annuities, but they're actually a great tool for the job of ensuring you have a decent income for live without over-saving. learn to love annuities, i say!

    for care homes, is there no insurance available to cover this (for younger retirees, who don't yet need a care home)? i know there are "immediate care needs" annuities for people entering a care home. but surely earlier insurance would be quite cheap, given the low probability of entering a care home?

    it's outside the scope of the self-help solutions usually discussed on MSE, but a better still solution would be to elect a socialist government which would introduce a National Care Service, similar to the NHS, i.e. free to all and paid for out of general taxation. this would be affordable for the same reason that early insurance ought to be relatively cheap - i.e. it's a low-probability event, with the cost spread (in this case) across the whole population.

    if, or for so long as, neither of the above 2 solutions are available, then wealthier people will probably want to plan to be able to pay for a care home. less wealthy people may decide that's unrealistic, and hope that State provision will be adequate if they need it.
    Originally posted by grey gym sock
    Annuity rates are terrible. Unless you have very big pension pots, are into your 60s, or have such bad health that they expect you to die early, I would avoid them. If the govt hadn't changed the rules so we don't need to take annuities then I'd be condemned to trying to work far longer than I want to even if I physically could.
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