These days, the odds are pretty good that you’ll live to 100, with more of us than ever predicted to live to a tenth decade. While there are many benefits to living a longer life, the realities of this require a new way of living, working and thinking.
The Office for National Statistics (ONS) estimates that 13.6% of boys and 19% of girls born in the UK in 2020 are expected to live to at least 100 years of age. This is projected to increase to 20.9% of boys and 27.0% of girls born in 2045. As technology improves and healthcare advances, more and more of us will live to be 100 as the norm. So what do you need to do in order to plan your life and finances accordingly?
100 year life finances
Firstly, while there are differences in how to live a 100-year life, one thing remains the same - pension saving is still crucial to a comfortable living in later life.
Roughly speaking, if you’re thinking about how much you’ll need in retirement, the Pension and Lifetime Savings Association (PLSA) estimates a single person will need about £11,000 a year to achieve a minimum living standard, £21,000 a year for a moderate lifestyle, and £34,000 a year for a comfortable retirement. For couples, it’s £17,000, £31,000 and £50,000, respectively.
For most people the State Pension will form a large portion of this. In 2022/23 the full new State Pension is £9,628 a year. Currently, both men and women can claim their State Pension from the age of 66, however, this is set to increase to 67 by 2028. Of course, the longer you live, the bigger the pot you’ll need to fund each year of retirement.
You can use PensionBee’s pension calculator to work out how much income your pension could generate for you in the future. The retirement planner is completely adjustable so you can add your age, the amount you’re saving and when you’d like to retire, to find out if you’re on track. And if you aren’t, you can adjust your savings goals accordingly.
But we have to be realistic - few of us will be able to save enough for a 34-year retirement. And potentially a decade more, if you choose to retire and access your personal and workplace pensions from the age of 55 (57 by 2028).
In the 100-year life, the three distinct stages of education, work, and retirement are no longer going to fit. Increasingly, to make our money stretch to age 100 we’ll have to, and in some cases want to, learn and work far beyond 66.
Learning and working beyond age 66
Working past age 66 might become a necessity for lots of people. But with many of us enjoying increasingly good health it can also be a huge opportunity to live out an exciting new period in our lives, instead of winding down.
We have been conditioned to think about retirement starting around age 66 – but what freedom could you enjoy by thinking outside that?
“The government needs to ensure that apprenticeships remain a high-quality training route for people of all ages and stages of their careers.” – John Harding, Global Head of Employment Tax at PwC UK
Education is not a time-limited pursuit in the 100-year life - living that long will mean we see a huge number of changes and technologies, so much so that it’s likely to become common for people to retrain at many points along the way.
Apprenticeships are no longer just for the young and less experienced. According to official government statistics, of the 288,800 apprenticeship starts in the first three quarters of the 2021/22 academic year, 46% were learners aged 25 and over.
Which employers are in need of apprentices? The three sectors with the most employer incentivised apprenticeship programme claims in June 2022 were:
Health, Public Services and Care
Business, Administration and Law
Engineering and Manufacturing Technologies
The opportunities are hugely varied and there is support for older apprentices from big employers like accountancy firm PwC.
Some good places to start to find out about adult apprenticeships include:
2. Starting a business later in life
Starting a business can happen at any age. Increasingly, those in their mid-sixties are continuing to work, with many continuing to work for themselves. In April to June 2022, the number of people aged 65 years and over in employment increased by a record 173,000 to almost 1.5 million, which is also a record level. The large majority of this increase included part-time self-employed over 65s, which increased by 76,000 (28.7%).
The rise of part-time self-employed older workers may be caused by many reasons, including the cost of living crisis. But it also highlights some of the flexibility in terms of hours and commitment that starting a business in later life can provide.
Skills built up over a lifetime don’t need to be retired at State Pension age. You can keep your mind and body active by putting your long-standing experience to use in a new venture. The additional income will also help support you in your possible journey towards a 100-year life. By law there is no fixed retirement age and you can continue working after taking your private pension. You can also continue working after the State Pension age.
Just remember, pension income is taxed in the same way as earned income. So anything you earn, or withdraw from your pension, above the personal allowance (which for 2022/23 is £12,570) will be taxed at your marginal rate. Age UK has some helpful tips for ‘olderpreneurs’.
3. Portfolio living
Living for a 100-year life isn’t just about getting the finances right - it’s also about how we spend our time. With more years to enjoy retirement, our lives can be made up of many different types of work/play activities, simultaneously. Portfolio living is exactly that idea. Not just thinking of yourself in exclusive terms, as a pupil or a worker or a retired person but instead, wearing many hats.
Applied to later life it may mean never choosing to retire, instead switching to part-time, then spending some portion of your time volunteering or doing a hobby, and the rest of your time perhaps looking after the grandkids.
It could mean having a few part-time jobs for variety, or combining learning, working and starting a business - some self-employment, an apprenticeship and a part-time degree studying a personal interest, all at once.Thinking this way can help us make the most of our lives now and at any age, regardless of whether we make it to our 100th birthday.
We’re more likely than ever before to live to 100, so we should plan with that in mind.
Apprenticeships can be a lifelong pursuit, they’re not just for young adults.
Make portfolio careers and portfolio lives - mix and match what makes you happy.
Flexibility, as well as a sound financial plan, is your key to a fulfilling 100-year life.
Laura Miller is a freelance financial journalist.
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.