Have you ever looked back and remembered what your parents or grandparents were like at your age? While we might not have noticed it while it was happening, we humans are slowly evolving and changing. We just have to look back at our parents or grandparents and what their “retirement” looked like to see how times have changed. There are several forces at work – we are living longer and ageing better – 60 is the new 40.
The actuaries who put the assumptions in place decades ago couldn’t have foreseen the impact of longevity and dramatically reduced birthrates. European and US pension schemes are going to require a rethink. Contrary to this, the old persons grant in SA is different and paid out of government coffers. It is also means-tested .
Step one is to get some idea of what you’re spending now and which of these items are going to change at retirement The original assumptions were that you’d live 20 years max post-retirement, in other words, 80-85. Using this assumption, a financial advisor could allow a capital amount designed to produce an income/pension to be depleted over 20 years, comfortable in the knowledge that 95% of their clients wouldn’t outlive their money. That is no longer true . You now must assume at least 35-40 years post-retirement.
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