Longevity in financial planning

Everything we do has a time frame. Whether it’s when we want to wake up or decide to take a holiday, our everyday decisions often involve time.

It’s no surprise that ‘time’ is one of the most used words in every language. We understand and use time concepts ‘all the time’, from a very early age.

A personal financial plan is usually based on each person’s time frame. It makes sense to establish this time frame first, because some important financial decisions can be dependent on how we choose to manage our longevity. An example is how we might approach financial longevity risk – the possibility of outliving our money. Understanding how long and well we might live can influence whether we keep working, change careers or take some other decision which could affect our finances.

It’s important to recognise that most actions we might take to influence our longevity are also likely to influence our quality of life – increasingly valued as we get older.

The Australian Life Tables are often used for a time frame. However, these numbers are only averages. Only 20% of the population fall within a few years of the average – and you don’t know if you are one of that 20%! See how much variation there is at age 65 for Australians. The average sits inside the bright blue column. Where are you likely to be across this wide range – and why?

The SHAPE Analyser, available for free at www.mylongevity.com.au identifies five key factors which help explain your own longevity – the rest of your life.

The factors are:

Surroundings – physical and social factors that can affect our wellbeing
Health – the current physical condition of our body and how we manage it
Attitude – how we see the future through important elements of our lives
Parents – factors which guide us about our genetic makeup
Eating – all the things we put into our bodies, not just food

The website explains how you can approach each of these SHAPE factors. Whether you do anything is up to you. What you decide enables you to take a view of the time frame you use in your plans – and how to monitor whether you are on track. As a general rule, the longer we live, the longer we are likely to live. Regularly reviewing our time plan and its consequences are important, and may change our financial and other plans.

The website also explains the stages through which you are likely to progress, typically a long period of independence followed by a short period of dependency. With this information, you can then plan more effectively for your health, finances, estate planning, aged care and end of life, using the advice of appropriate health, financial, legal and other professionals.

This approach empowers you to make a properly informed commitment to your plans for the rest of your life and adapt them as your circumstances change.

This article is by David Williams David Williams is Founder and CEO of My Longevity, a web-based business he established in 2007.
David, a qualified Financial Planner, has been involved in personal retirement and financial planning for more than 30 years, with a special focus on longevity and healthy ageing. For more information on My Longevity and their unique SHAPE approach to making longevity information available and easier to understand, head to their website at www.mylongevity.com.au

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