More people are living to 100. Here’s how you could plan financially for a lengthy retirement

Reaching the age of 100 is increasingly common, especially for women. Find out how to plan financially for a lengthy retirement that could last 30 or 40 years.

Ethel Caterham is a British “supercentenarian” who celebrated her 115th birthday on 21 August 2024. According to a report by the BBC (22 August 2024), Mrs Caterham is believed to be the oldest person in Europe.

While 115 may seem like an exceptional age to reach, the most recent data from the Office for National Statistics (ONS: 1 October 2024) reveals that the number of centenarians in England and Wales more than doubled between 2002 and 2023.

Yet, many adults in the UK feel unprepared financially for a retirement that could potentially last 30 to 40 years – or more. Research by This is Money (11 March 2024) has found that 48% of adults in the UK are worried about their pension savings running out in retirement, with women (61%) expressing more concern than men (53%).

Read on to find out how you could plan financially for a lengthy retirement to ensure that you enjoy the lifestyle you desire no matter how long you live.

It’s important to factor in your potential life expectancy when planning for your retirement

Understanding your potential life expectancy is a fundamental part of planning financially for your retirement. The longer you live, the more money you’re likely to need in your retirement pot to fund a comfortable lifestyle.

Of course, no one can predict exactly how long they will live for. However, the ONS life expectancy calculator could provide an estimate that helps you calculate how much you need to accumulate in your pension, savings, and investments to support you throughout your life.

For example, according to the ONS calculator, a 50-year-old woman today has an average life expectancy of 87 years and an 8% chance of living to 100. A man of the same age has an average life expectancy of 84 years on average, and a 4.8% chance of becoming a centenarian.

As you can see, women’s greater average life expectancy means they may need to save more for their retirement than men.

However, forecasting your life expectancy is not an exact science. Indeed, how long you live may also depend on individual lifestyle and health factors.

So, it may be wise to plan for a longer retirement than you expect to have, rather than underestimating your longevity and potentially running out of money in later life.

Think about how your spending might change during your retirement years

When planning financially for your retirement, it might help to consider what you’d like your life to look like after you finish work.

Do you have big travel plans? Are you itching to remodel your home or buy a holiday property? Your retirement goals are likely to affect how much income you’ll need.

What’s more, your spending habits might change as you progress through different stages of your retirement.

Typically, people spend more in their early retirement years when they have the energy and enthusiasm to make the most of their new-found freedom and fulfil long-held dreams. Over time, your spending may stabilise as retirement becomes the “norm” and fewer items remain on your bucket list.

Then, in your later years – as you get closer to the 100-year milestone – growing medical or care needs could lead to an increase in your spending.

Thinking carefully about the lifestyle you want and how this “retirement spending smile” could affect your income needs may help you plan financially for the long term.

Remember to include later-life care costs in your financial plan

While it might be difficult to think about if you’re currently relatively young, fit, and healthy, there may come a time in your later life when you need healthcare support.

Figures published by Which? (15 August 2024) show that more than 400,000 people in the UK live in residential care and nursing homes, and almost half of these completely self-fund their care.

While the cost of later-life care varies based on individual needs and the type of care you choose, as well as where you live, it can be significant. According to carehome.co.uk (13 December 2024), the average weekly cost of residential care in the UK if you are a self-funder is £1,160, and the average cost of staying in a nursing home – which typically provide specialist care – is £1,410 a week. This equates to £60,320 and £73,320 a year respectively.

Factoring these potential later-life care costs into your long-term financial plan could ensure that you’re able to choose the type and level of support you want when the time comes.

There are a range of options to explore, and a financial planner can help you incorporate these in your retirement planning. This might mean creating a savings and investment strategy to build a financial safety net for the future or taking out later-life care cover.

Seek financial advice to help you understand and provide for your future financial needs

As you can see, understanding your long-term financial needs and planning for a potentially lengthy retirement requires careful consideration of multiple factors.

Yet, failing to prepare for the possibility of becoming a centenarian or even a supercentarian – a person who is 110 years or older – like Ethel Caterham, could leave you with a shortfall in your retirement income.

As an experienced financial planner, I can help you structure your finances to support your long-term goals and ambitions.

For example, I can use cashflow modelling to forecast your future income needs. Together, we can then create a bespoke plan that supports your expected retirement lifestyle.

Get in touch

If you’d like to find out more about how I can help you build the wealth you need for your desired retirement, however long it may last, please get in touch by emailing lottie@truefinancialdesign.co.uk or calling 07824 554288.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The Financial Conduct Authority does not regulate estate planning, cashflow planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.  

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

FP32831 APPROVED BY 2PLAN ON 16.01.2025 UNTIL 16.01.2026