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Sense of expectancy

Life expectancy in Britain has hit its highest-ever level. Figures from the Office of National Statistics show that with no further improvements in life expectancy, a boy born today can expect to live to age 77. A girl born today can, on average, expect to live to 81. If you manage to make it to 65 years old, the news is even better. Again, with no further increases in life expectancy, a male 65-year-old in good health today can expect to live to just over 82 while a woman meeting the same criteria can expect to live to 85.

Of course these figures are only averages and they are trying to predict what will happen anywhere from 15 to 80 years in the future. But the thing about averages is that there are very few people who are average. Some people will live shorter lives than the median figure while some will live longer, in some cases a lot longer.

In 1911, there were only 100 centenarians in the UK but by 2008 this number had grown by a factor of 95 to stand at 9,600. Several years back, scientists predicted that the first person to live to 150 years old had already been born and with advances in medicine, improvements in diet and a greater increase in disposable wealth you will be hard pressed to find many people betting on a reversal of the trend for longer and longer lives.

But greater longevity does bring with it a number of problems.

If mortality continues to improve, many people working today will spend almost as long in retirement as they do in employment and this raises real questions on how people pay for their retirement. With the decline of DB pensions and the continued erosion of state benefits people will need to ensure they have made adequate provision for a retirement that could be considerably longer than anticipated.

The cost of long-term care is a particularly thorny issue. Although many people will remain active throughout their retirement, for some, the cost of full-time or residential care can become very expensive very quickly for the elderly.

With proportionally fewer people of working age to pay for welfare costs, the issue of who pays for the cost of long-term care becomes more urgent. The issue of LTC has risen up the political agenda this year, with both the Government and the Conservatives outlining their plans.

With these concerns in mind, this issue of Retirement Planning takes a specific look at some of the problems that increasing life expectancy is causing as well as looking at what advisers need to take into account when planning for the future.

Gregor Watt
Deputy editor
Money Marketing

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