The number of older people is growing as the baby boomer generation moves into retirement.
The population boom that followed the Second World War is triggering a pension and care crisis and many of those needing the most help seem unequipped to deal with their future financial and health requirements.
Later life financial planning is becoming more important for those approaching retirement and is a lot more than writing a will and deciding how an estate should be divided when someone passes on.
Questions need to be asked, like:
- How much saved cash will generate the target return to fund a reasonable retirement?
- How to manage retirement funds tax efficiently
- Planning for long-term care
After dealing with these issues, estate planning should be considered.
Decumulation is the technical term for spending wealth in retirement.
The assumption is people spend their working life accumulating savings which are spent in retirement.
Decumulation is about spending savings in such a way that they last, but many people simply have not saved enough while working and must make the best of their financial plight.
Unforeseen events, like the coronavirus, have a huge impact on savings and investments.
The world economy has taken a decade to pull clear of the 2008 financial crisis. Markets, house prices and investments were back to pre-crisis levels only to see billions wiped off their value almost overnight.
Long term care
Younger investors have the time to recover from their losses, but those about to give up work do not have that luxury and may find that they are teetering on the brink of not having enough resources to fund their retirement plans.
Add to that, around one in four will have the extra burden of financing expensive long term care.
“Ageing will increase the total amount of ill-health and disability in the population,” said the report Future of an Ageing Population from the Government Office for Science.
“There will be an accompanying change in the nature of ill-health, with a relative shift away from acute illness towards chronic conditions, multi-morbidities, cognitive impairments and long-term frailty.”