Life expectancy is rising. Mike Fosberry of Smith & Williamson discusses successfully advising a growing number of retirees.
I think the successes are people obviously living much longer nowadays.
Longevity I think it one of the biggest issues we face economically from a family life perspective. It's a huge impact in terms of well an economic perspective in terms of things like care costs, etc.
And how do you deal with longevity?
People are, let me say, they're retiring at 65, they may have a spouse who's three years younger than them on average, that's normally the case. One of them is likely to be alive in 30 years’ time, actuarially speaking.
So that's a huge issue because their retirement life may in some cases be longer than their working life. So do you have enough money when you retire to sustain yourself through what could be a very long retirement?
And bear in mind that the latter stages of the retirement are probably going to be in pretty poor health as well. So how do you cope with that? How much money do you need to cope with that? And so we've got to get people focusing on those issues now.
Government is looking at it.
Obviously we've seen extension of state retirement age. For most people it's going to be 67 or 68, perhaps longer in the future.
That's only part of the solution the government will put to it. They can't afford to increase the amount of money set aside for things like care bills, we haven't got the money to do it.
So there's going to be a huge incentive or a huge requirement for people to fund for themselves.
And that's part of my job, making sure that they focus on those issues.
In terms of success, well we have a lot of clients who are well into retirement, in their late 80s, who seem to be surviving on the income and capital that we're able to provide them with in their retirement.
So I'm touching wood when I say this because ultimately peoples’ expenditure patterns, etc differ.
But in the main I think we've done a pretty good job. And I think one of the issues there is being in a situation where you're able to provide that long term advice and have the capability of being able to do that as an organisation.
______________________________________________________________________________________Life expectancy is just one issue that is changing the ways businesses are thinking and operating. Inside Finance will bring you more perspectives on the big issues in 2014.