Why we ALL need to plan to live to the age of 100: How would your finances stand up?

By RACHEL RICKARD STRAUS

Updated: 04:40 EST, 25 September 2023

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Good health: Businesswoman and fashion icon Iris Apfel is 102

How would your finances hold up if you lived until 100? As the number of centenarians in England and Wales hits a record high, financial experts are warning that savers need to plan out their finances for the possibility they too could reach 100.

Official figures last week revealed the number of centenarians more than doubled since 1991 to 13,925 by 2021. A quarter reported having good or very good health, much like US businesswoman and fashion icon Iris Apfel, who is 102 years old.

Stewart Sanderson at investment management firm Brooks Macdonald advocates planning for reaching the age of 100. 'We expect further improvements in medical science and a growing body of knowledge about health,' he says. 'This makes it increasingly likely that a 50-year-old might only be halfway through their life.'

Wealth manager Evelyn Partners crunched the numbers for Wealth & Personal Finance to show how much you would need to save to have a good standard of living if you lived until 100. It revealed that if you want a minimum standard of living – with few holidays, luxuries or home improvements – you would need to have saved £17,500 by the time you hit the age of 67. This assumes you own your home outright and are eligible for the full new state pension. You would also have just £1,435 in savings remaining by the age of 100.

For a moderate standard of living, you would need £283,000 at age 67. This would afford you a few more luxuries, such as a European holiday every year and some money towards home maintenance and decorating. For a more comfortable retirement until 100, you would need £638,000 saved, according to Evelyn's calculations.

The figures assume you run down all of your savings by the age of 100. If you wanted to pass on some to loved ones as an inheritance, you would have to save more. However, the calculations assume that you do not tap into the value of your home during your lifetime through equity release.

Lucie Spencer, a director at Evelyn, says: 'A large proportion of elderly individuals have most of their wealth in their home, especially with the increase in property prices within the last 40 years or so.

'Many older retirees who wish to remain at home will need adaptations to enable them to continue to live there in comfort, all of which needs to be factored into their financial planning.'

Ade Babatunde, a director at Investec Wealth & Investment, adds that retirees should also consider that their spending will not be smooth through the decades and that care costs can add up in later life. 'When we help clients with financial planning, we assume care costs equate to around £52,000 and nursing care to £78,000 per year. In addition, the cost of care is normally two or three percentage points ahead of inflation.'

Steven Cameron, a director at pension firm Aegon, says the increase in the number of centenarians should be a wake-up call for those planning their later life.

'While it's not yet the norm to live to 100, it's something we shouldn't dismiss as 'not for me',' he says.

'Longer life expectancies mean we need to think differently about later life. Our later years may be very different from previous generations – in many ways we're in uncharted territory.'

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