The challenges of increased longevity: planning for your “second 50” and your “lifestyle years”

Category: Australia & News

According to the most recent figures from the Australia Bureau of Statistics (ABS), average life expectancy at birth for males was 81.2 years and 85.3 years for females.

ABS data also confirms that around 30 years ago (1992), life expectancy at birth was 74.5 years for males and 80.4 years for females.

These increases in longevity have been primarily driven by:

  • Improved health monitoring and awareness
  • Medical advances, particularly in fields such as cancer and strokes 
  • Treatment that can enable you to live with diseases that would previously have proved terminal. 

You can use this QSuper calculator to get an idea of how long you can expect to live based on your current age and gender. 

This improvement in our life spans could have serious consequences for your wealth. Keep reading to find out why.

More people are living to 100 than ever before

If you bear in mind those longevity stats are averages, there’s a decent chance that you could enjoy a lifespan of 90, or even 100 years. 

Indeed, a National Seniors Australia report reveals there are now about 4,250 people aged 100 years or older living in Australia. Furthermore by 2050, statisticians believe that figure could exceed 50,000.

While we clearly won’t all reach that milestone, many of us are likely to be able to enjoy the gift of a lifespan far in excess of that enjoyed by our parents or grandparents. 

The prospect of a long life presents you with both opportunities and challenges.

Australians are working longer than they did before

With longer life spans, it’s interesting to note a study by the Australian Institute of Health and Welfare that reveals how Australians are increasingly working to older ages. 

As an illustration of this, the study confirms that in the 20 years leading up to April 2021, the workforce participation rate of older Australians more than doubled.

Furthermore, nearly three-quarters (73%) of Australian workers said they were keen to continue working during retirement. However, they made the key proviso that work needed to fit around their lifestyle, rather than previously when it was the working person who had to adapt to the demands of employment. 

The report describes this new alignment as “the lifestyle years” – the period between ages 55 and 69 where work is still important, but the structure is dictated by other lifestyle choices. 

An ABS report confirms that 19% of the workforce are now over 55, and that the number of people between 55 and 64 in work has risen from 48% to 70% in the past two decades.

While some need to stay in work for longer than they had anticipated for financial reasons, for many others work is seen as a way to maintain a social network, keep your brain active, or give your super fund a boost.

Your “second 50” and a multi-stage life

For many years, analysts used to break down your life into a traditional three-stage model: 

  1. The period during which you’re in full-time education
  2. Your working life
  3. Your retirement years after you’ve stopped working.

But, the fact that many people are now working past the time that they would previously have retired would suggest that that model isn’t as relevant today as it used to be. 

Some people are continuing to work after they have started drawing from their retirement fund, blurring the demarcation between a working life and retirement. 

Furthermore, research carried out in the UK by Aegon entitled “The Second 50” suggests that this kind of rigid structure is becoming increasingly less common, and that we now enjoy a far more fluid lifestyle. 

It makes the point that it’s not just in Australia where people are expecting to work longer. The research finds that only 27% of people in the UK who are currently in employment expect a “hard stop” retirement.

The Aegon report describes a “multi-stage” life driven by technological developments and a range of social and cultural changes that have meant alterations to the pattern of your life.

These include:

  • The rise in online communication meaning that we have far more flexibility around how, when, and where we work
  • Online facilities creating the ability to continue learning way beyond the time we leave formal education.

As a result, even if you’re in your 40s, it’s important to be aware of the opportunities that a multi-stage life can provide you with. It’s also crucial to appreciate how long your money may need to last to enable you to fund your retirement. 

Plan your second 50 in your first 50

When it comes to financial planning, there are no “one-size-fits-all” solutions. Your second 50 will look different to everyone else’s. 

However, there are likely to be some common aspirations and concerns that everyone will share to some extent. 

These could include:

  • The state of your health
  • The financial support needed by your family
  • The value of your accrued assets.

To manage your potential lifestyle years, and to meet the challenges of your second 50, it’s important to plan ahead. With a well-structured financial plan that you review regularly, you’ll have the confidence that you’ll be able to adapt, live a long life, and always be financially secure. 

A good first step is to think about some of the key issues you believe you may face, as well as starting to map out – even just in outline – how you want to spend your time.

You might need to adapt to changing circumstances or amend any plans you already have in place to account for a potentially longer life than you may have previously anticipated.

Get in touch

If you have any queries regarding your financial planning, please get in touch with us. 

Please note:

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

This article is for information only. Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances. 

All contents are based on our understanding of ATO and HMRC legislation, which is subject to change.