Long live the Queen!

The Queen will turn 92 this year and although living longer is a good news story, it does raise the question of how the cost of us living longer will be funded.

When you take into account that due to advances in modern medicine, the life expectancy of a British baby born today could be 104 years old, it is clear there is a real need to address this now.

Many people actually want to live longer and this presents a financial challenge, but who will be responsible for providing the money required to look after our ageing population? The employer? The State? Or the individual? It is important to consider now that you may live longer than you expect, and plan your long-term saving so that you are prepared.

Getting an estimate of your life expectancy using an online calculator might feel like a strange thing to do at this stage in your life, but it will give you an idea of how long you can expect to live on average. The Office for National Statistics (ONS) research shows that older people in England are living longer than ever before. 65-year-old men are currently predicted to live for another 21 years, with women a further 24 years, so you can see that preparing to fund your later life savings to last for 20+ years in retirement when you no longer have a salary is a realistic target. What’s more, life expectancy may increase further.

As a result of us all living longer, the Government has also introduced a gradual increase in the State Pension Age (SPA) which will begin from 2018. A recent study shows that funds to pay for the State Pension could run out by the early 2030s.

The State Pension Age is increasing gradually from 2018 as follows:

• November 2018 – from age 60 – 65
• 2018 – 2020 – age 66
• 2026 – 2028 – age 67
• 2037 – 2039 – age 68
• This could possibly increase to age 70

Funding the cost of an aging population is by no means clear-cut at this point, but if you foster good saving habits from an early age, you will hopefully benefit in the long run!