Live life to fullest while counting the days
Try asking an older person how long they think they might live. Reactions will range from "none of your business" (sometimes aggressively) through "dad died at 84" to "haven't a clue, mate".
Why do people react so differently when the subject is raised?
The range of answers gives a clue. Talking about remaining lifespan requires confronting your mortality and possible reasons. Fear of death, concerns (even guilt) over not "properly" managing health and lifestyle are others. Add in the realisation that the family home might be inappropriate, the worry over not leaving much to the kids and having to talk advanced age caring with them, acknowledging family-linked physical and mental disabilities and plenty more, and we have a pretty complex brew.
So, is having a magic number really so important? And if so, what might it be?
If you intend to rely only on the age pension (like more than 65 per cent of Australians), then it might seem a waste of time to consider "how long". After all, the government is paying for it.
But since the numbers of Australians aged 65 or over is increasing rapidly (thanks to the baby boom), who will pay for your pension since there will be relatively fewer workers and more older people for them to support? It's sensible to be as self-sufficient as possible.
If you are in the remaining 35 per cent who are aiming to be fully or partially self- funded, good financial planning decisions should be underpinned by a sensible view on how long you expect to be providing for.
You could use the Australian Life Tables - but these are only averages. Worse, they underestimate the more likely outcomes by two to three years at age 65. "Not much," you say. But if you have about 20 years left at age 65, the error from using the Life Tables is already 10 per cent to 12.5 per cent. If you're tertiary-educated and work full time, you can roughly double this error. Gosh, suddenly my retirement nest egg needs to be 20 per cent to 25 per cent more!
This is the start of your longevity awareness. Having a useful number is a good beginning, but once people start to think "How can I change this?", that's when the lights really go on. If you know by how much you might be different from average and have some idea why, you can make better-informed decisions.
Naturally, this is much more of an issue for people who might live longer than they expect. We do know that more than half the over-65 population will live longer than the government's average - research in the past 30 years is giving us useful clues.
Given you might live longer than expected, you should work out the impact of working past age 65 on your finances. Your financial adviser can help with this, or check the Australian Securities and Investments Commission's MoneySmart calculators.
Making an informed effort to manage your health can keep costs down. Research suggests many people are less concerned with making a big effort to live longer - they just want to live as well as possible.
Being longevity aware is the first step to making better decisions as we age. It's simply about making the most of the time we have left.
Visit his website at mylongevity.com.au.
Frequently Asked Questions about this Article…
Longevity awareness means planning retirement around a realistic view of how long you might live. The article says it helps you make better financial and lifestyle decisions—from how much you save to whether you work past age 65—because knowing a likely time frame is as important as knowing how much money you need.
The article recommends using your expected remaining lifespan as the key time frame. Relying on averages can underestimate likely outcomes, so factor in that many people live longer than government averages and consider personal traits (health, education, work history) that can extend life expectancy when estimating how much retirement savings you'll need.
The article notes Australian Life Tables are averages and can underestimate actual outcomes—about 2–3 years at age 65. That gap can translate into a 10–12.5% error if you expect about 20 years in retirement, and the error may be larger for some groups, so treat the tables as a starting point, not a definitive answer.
According to the article, using average life tables can already create a 10–12.5% shortfall for roughly 20 years of retirement. For people with factors linked to longer life (for example tertiary-educated full-time workers), that shortfall could roughly double, implying you might need around 20–25% more savings than a simple average-based estimate.
Yes. The article suggests assessing the financial impact of working beyond 65 because it can materially affect how long your savings last. It recommends discussing this with a financial adviser or using tools such as the Australian Securities and Investments Commission's MoneySmart calculators to model scenarios.
The article points out that making informed efforts to manage your health can help keep later-life costs down. Research also shows many people prioritise living well over simply extending life, so good health management supports both quality of life and more predictable retirement expenses.
The article recommends consulting a financial adviser and using ASIC's MoneySmart calculators to model longevity and retirement scenarios. It also mentions the author's website, mylongevity.com.au, as an additional resource for longevity-related information.
The article notes more than 65% of Australians currently rely on the age pension, but with a rapidly ageing population there will be relatively fewer workers supporting more retirees. That demographic shift makes it sensible to aim for as much financial self-sufficiency as possible rather than relying only on the government pension.
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