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Advising on the 100-year life

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How we can meet the health and wealth challenges of a society that is living longer

What’s the solution to the ageing dilemma? As we grow older and live longer as a nation it puts strain on the state and on our own resources. According to the 2017 book The 100-Year Life: Living and Working in an Age of Longevity by Lynda Gratton and Andrew Scott half the babies born in wealthier countries since 2000 will see their 100th birthday – 103 in the UK - changing everything from work and economics to our relationships. While living longer, potentially to 100 years and more, is to be welcomed, no-one would want to live it in poor health and relative poverty.

The challenges of long-term care are well documented. State pension ages for men and women have been increasing and governments have launched new initiatives such as pensions freedoms and auto enrolment in recent years in order to boost individual retirement savings, which for most people are inadequate. As the 100-year life states, what this means for individuals is: “If we live for longer we need to invest more in our financial assets to support a longer life. However, a longer life is not just about getting the finances right but also about making sure you invest in your health, your families and friends and your own productive abilities. A longer life will lead us to reassess how we balance these financial and non- financial forces over our lives.”*

Snapshot of retirement savings

VitalityInvest conducted research in May 2019 with around 6,000 consumers via its Your Vitality Future calculator to assess the state of the nation’s retirement savings. The picture the results painted was concerning, as might be expected. Our data shows women’s retirement savings are set to fall short by 16 years, while men are on average likely to come up 10 years short. So, although the average woman in the UK wants to retire at 63, if they did so their savings at retirement would run out by the time they were 69, assuming they are spending £27k per year. This is based on an average life expectancy of 85 and average savings of £392 per month. In order for Brits to fund their living expenses to age 85, they either need to drastically increase the amount they save or continue working for significantly longer.

Behavioural economics in action

So what does this mean for advisers? We think there is a real opportunity for advisers to differentiate themselves from the competition by explaining to clients that living longer requires an investment in their health as well as their finances. The two are inextricably tied together. Our VitalityInvest proposition tackles this challenge using behavioural economics to boost people’s wealth when they engage with a healthy living programme. We’ve just launched changes to our ISA, Junior ISA and Retirement Plan, giving customers access to this programme at no cost. It’s now more accessible and easier to reap benefits than ever before with a refund of year one product charges, and the opportunity to pay no product charge from year two if clients engage with our programme and reach the platinum tier of activity – a level attainable for everyone, not just young or athletic people. Financial boosters are added to investments and we offer discounts on a range of leading brands to encourage healthy living. Behavioural economics in action. We believe advisers are in a unique position to add a whole new layer of value and expertise to clients’ wellbeing. We plan to help them do this by building the products and tools that enable us to meet the wealth and health challenges of the future. To find out how the next evolution of VitalityInvest is tackling the challenges of the 100 year life visit