When planning your retirement, the lifestyle you want to achieve is an important consideration and a starting point for setting your long-term wealth creation plans.
The sum of money that you can accumulate during your working life will drive how much income you can generate in retirement. This obviously then affects your lifestyle options, especially as you may have limited opportunities to ‘top up’ your capital after you have retired. Getting it right before you retire is important.
The impact of life expectancy
Changes in health care and medical treatment have contributed to longer life expectancies and evidence suggests that this trend may continue. Retirement could reasonably span a period of 30 years or more, so the possibility that some of us may outlive our savings is not at all unrealistic.
To set your retirement plans start by thinking about your potential life expectancy. Average life expectancy tables can give you a starting point, but you then need to consider how your own health situation or family history will affect your expectations. The following table shows the average life expectancy rates for men and women between the ages of 55 and 70 years.
Table 1 – Life expectancy rates
Source: Australian Life Tables 2017-19
| Age | Male | Female |
| 55 | 28.25 | 31.55 |
| 56 | 27.38 | 30.64 |
| 57 | 26.51 | 29.72 |
| 58 | 25.66 | 28.81 |
| 59 | 24.81 | 27.90 |
| 60 | 23.96 | 27.00 |
| 61 | 23.13 | 26.10 |
| 62 | 22.30 | 25.21 |
| 63 | 21.49 | 24.33 |
| 64 | 20.68 | 23.45 |
| 65 | 19.87 | 22.57 |
It is also important to understand these numbers are averages. So on average, 50% of people should expect to live longer than the numbers shown.
The next step is to work out how much you have and how much you can use for your retirement.
This information is, of course, general in nature and it is important to seek specific retirement planning advice to comprehensively address issues of risk, return and volatility.
