Are you going to be strapped for cash when you retire? To find out, here are the questions you need to ask.
A number of research projects published lately all agree on one concerning fact: we tend to have an exaggerated impression of what our lifestyle will be like, when we finally give up work.
To plan realistically, and to secure a comfortable and worry-free lifestyle for yourself in retirement, there are three key questions.
First - how much will I need? To figure that out, you need to predict the second: how long will my retirement be?
And only when you have pinned down the first two, can you proceed to the third (and most urgent) question: am I saving enough today, to achieve that comfortable lifestyle?
Latest figures for Northern Ireland say that over the two-year period 2015/17, life expectancy was 78.5 years for men and 82.3 years for women.
However, those are just the averages, and new numbers from the Northern Ireland Statistics and Research Agency (Nisra) this week show that many more of us are reaching the age milestone of 85 than ever before.
Here’s the stunner that comes out of Nisra’s findings: over the last decade (2008-18), the population aged 85 and over in Northern Ireland has increased by 30 per cent.
This population, referred to as the “oldest old”, has grown at a rate five times higher than the population of Northern Ireland as a whole.
You are particularly likely to be long-lived, and need to plan for a long retirement, if you are a woman: women make up two thirds of the oldest old. And while the average longevities are 78 and 82, you might live much, much longer and become one of the 300 centenarians (i.e. those aged 100 or more) living in Northern Ireland today.
Just to put it in context, longer lifespans are happening in most developed countries, not just in our neck of the woods. Rising longevity is a global phenomenon, not just a local one.
We are quite high up in the world longevity rankings, close enough to the top four world locations in 2019, where the ‘healthiest’ countries by life expectancy are Monaco (89.32), Japan (85.77), Singapore (85.73) and Macau (84.6).
As far as we are concerned here in Northern Ireland, we could quite realistically be looking at a retirement of 20 years.
So how much do you need to be comfortable, in those two final decades?
The consumer boffins at Which? magazine recently surveyed over 6,000 retired singles and couples, and have estimated what is a comfortable income in this day and age. Bear in mind that many people will have paid off their mortgage before they retire, and that’s one major expense they no longer have to carry.
Which? concluded that the average household spent £2,220 a month, that’s £27,000 a year, in the past year. This consisted of £17,800 on basic expenditure and bills, and the rest on luxuries like holidays, hobbies and eating out. They recommended this amount for a ‘comfortable’ retirement.
Of course, if you want to get fancy, and are hoping to jet off on long-haul holidays, plus replacing your car every five years, then your target income would have to be £42,000.
Part of quality financial advice is finding answers to our three main questions above, so that we can help you get your saving right to ensure the future you wish for.
Whether you’re from Tyrone, Tokyo or Monte Carlo, we’ll put together a realistic plan for your retirement – starting today.
:: Michael Kennedy and Shaun Doherty are independent financial advisers and pensions specialists, and can be contacted on 028 71886005. Further information on Facebook at Kennedy Independent Financial Advice Ltd or at www.mkennedyfinancial.com
