January 14th, 2025
How to save and invest in preparation for a 100-year life
In generations gone by, the prospect of living to 100 seemed almost miraculous. But today, there’s an increasing likelihood of living for longer and becoming a centenarian.
Indeed, the Office for National Statistics (ONS) life expectancy calculator says that a 50-year-old woman has an 8% chance of becoming a centenarian, and a man of the same age has a 4.8% chance of doing so.
If you’re younger, the likelihood increases: 30-year-old women have a 12.2% chance, while their male peers have an 8% chance. 19.1% of five-year-old girls are predicted to live to 100, along with 13.7% of five-year-old boys.
While living a long life is a comforting thought, funding a 100-year life requires efficient planning and preparation.
Here’s how to plan and prepare for becoming a centenarian.
Building a long-term investment portfolio may serve you well in later life
Investing is one of the cornerstones of building wealth over the long term.
Statistically, according to a study by Schroders, equities are almost guaranteed to outpace inflation over a 20-year period, whereas cash might only do so 60% of the time. With inflation eroding the real-terms spending power of cash over many years, if you live a very long life, you could find that your savings don’t stretch as far in future.
Whereas, creating and building an investment portfolio, and strategically decumulating this wealth in later life, could be a smarter plan.
There are several vehicles within which to invest, particularly if you’re paying attention to tax efficiency.
Two of these are:
- Your pension. Before you begin taking your pension benefits, you can usually invest up to £60,000 a year tax-efficiently (including tax relief and employer contributions). This is known as your “Annual Allowance”. Your Annual Allowance may be lower if your income exceeds certain thresholds or you have already flexibly accessed your pension. Gains you make within a pension aren’t subject to Capital Gains Tax (CGT), but your pension withdrawals could make you liable for Income Tax.
- A Stocks and Shares ISA. As we covered in our recent blog on ISAs, Stocks and Shares ISAs can be a hugely important vehicle for investing over the course of many years. As of the 2024/25 tax year, gains are free from CGT and Income Tax, and withdrawals are tax-free too.
As you progress through life, growing your wealth through investments may enable you to fund your preferred lifestyle in your later years.
It may be wise to plan and prepare for health and social care costs
In the UK, although we have the NHS to rely on for most healthcare, later-life care is not always covered by the NHS or local authorities and can be very expensive.
As of January 2025, and for the foreseeable future, most long-term residential and nursing care is means-tested as follows:
- If your total wealth, including properties, is less than £14,250, you could access later-life care for free. This is known as the “lower capital limit”.
- If your estate is valued above £23,250, known as the “upper capital limit”, you must pay for your own care.
- If you have wealth standing between the upper and lower capital limits, you may be required to pay for some of your own care.
While the government previously had plans to cap the amount an individual could spend on health and social care at £100,000 over their lifetime, these proposals have been shelved for the time being.
With this in mind, it’s prudent to begin thinking about:
- How you might afford care costs if you live to 100
- Whether your loved ones could provide some care to reduce your financial burden.
While living a long life may be a comforting thought, planning ahead for potential care costs could mean you’re not in danger of running out of money as you become elderly – something 71% of retirees consider their number one concern, IFA Magazine reports.
Of course, government regulations where care costs are concerned can always change. But being prepared today could allow you to confidently navigate any future changes.
Read more: Is “health span” the new lifespan and how can you improve yours?
Financial planning could provide peace of mind for future centenarians
Nothing can truly predict whether you will live to be 100 – but if you are hoping to live a long life, financial planning could provide you with ample peace of mind.
We can assist you with inheritance planning, pension decumulation, protection, and care fee planning, ensuring that you’re prepared for any eventuality.
With a professional by your side, you may be able to enjoy your life to the fullest, safe in the knowledge that your financial plan is in professional hands.
Email enquiries@prosserknowles.co.uk or request a callback from one of our advisers.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.