Personal Investing
Ed Monk 12 Oct 2017 04:58pm

Don't underestimate the very old

Fidelity Personal Investing can proudly claim to have 86 clients now over the age of 100.

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Caption: Increasing life-expectancy is changing what the world looks like

To make that a little more real for you - the youngest of these was born in the year that Lenin led the Bolsheviks to overthrow Tsar Nicholas II and start the Russian revolution.

Our centenarians have swelled in number as well, up from 79 last year. This is part of a wider trend of longer living which means surviving beyond 100 will become, if not exactly common, then far from uncommon.

The trend was underlined last week in new data from the Office for National Statistics, contained in a report named ‘Estimates for the very old’. It showed that Fidelity’s 86 centenarian clients are part of a club that is now 14,910-strong across the UK.

For the 90-and-over age group, the number has grown to 571,245, up 2.7% in a year and meaning this cohort is one of the fastest growing in the country, in percentage terms. It has been growing continuously for the last few decades as improved medicine, diet, sanitation, housing and much else besides add up to help people stay healthier and live to ever-greater ages.

The only recent dip in the rate of growth came in 2008 when the overall number of nonagenarians was impacted by a lower number of births in 1918 - a cost of the First World War and the hole it left in the UK’s male population.

Living in a world of the very old

Pension, increase, It will increasingly be the challenge of governments to help people lead productive and fulfilled lives as they age. That means in areas like housing and social care for those living to very old ages.

But it also means change at younger ages too, and at the point of retirement in particular. The traditional notion of working at full speed and then stopping completely at a traditional retirement age around 65 is unlikely to meets the demands of our ageing population. Many will struggle to fund a retirement that could last more than thirty years without their own savings, and perhaps some earnings as well.

The steadily rising state pension age means people are already scheduled to work later into life than they do now. Implicit in the fact that people are living longer overall is the fact that they are healthier at retirement age, and therefore better able to work for longer. This isn’t going to be possible or desirable for everyone so it falls to policymakers to help them cope.

Individuals can help themselves, by planning their finances and their likely work path. No one is going to rejoice at having to work for longer, but it’s equally true that many retirees feel too young and too active to stop work completely at 65.

It might suit them to work longer, particularly if that work is on reduced or more flexible hours. Taking time out during their career to retrain to allow them to ultimately work longer and in different areas later in life could become more common. Income during the transition to retirement is likely to come from multiple sources - earnings from work, state pension and private savings - with each phased in and out as work turns into retirement more gradually than in the past.

Fidelity has been doing its own work on rising life-expectancy and we hope to soon add to the ongoing discussion of longer-living, in particular highlighting why working-age people today can expect a materially longer old-age than colleagues from the generation immediately preceding them.

Some things are already clear as we enter a world of the very old: saving earlier and harder can only improve your choices when retirement, and old age, arrives.

Ed Monk, Fidelity Personal Investing

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Important information

The value of investments and the income from them can go down as well as up, so you may not get back what you invest. This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment. Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity. Fidelity Personal Investing does not give personal recommendations. If you are unsure about the suitability of an investment, you should speak to an authorised financial adviser.



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