Live Long & Prosper

Last year Time Magazine ran a story on human longevity that caught our eye.  It focused on the incredible scientific advances pushing human longevity beyond what we ever thought possible.  It got us thinking about the implications of this profound change on how we provide financial planning services.  While this article focused on the science of longevity, discussion on the financial implications of longevity has generally focused on the negative implications for state finances. The depressing message in this discussion has been that our generation will become a terrible financial burden on the tax payers of the future; our children and grandchildren.

As financial planners our focus is on the positive personal and lifestyle implications of living longer.  Our interest in this area led us to a new movement in Ireland called “The Third Act”.  The mission of The Third Act is to bring a focus on the exciting opportunity presented by this new gift of longer life.  It has huge societal implications not least in terms of financial planning. Good financial planning is not an end in itself.  However it is an essential step to enjoying a richly rewarding later life.  A simple but comprehensive financial plan facilitates exploration of new possibilities in middle and later life without the fear of ever running out of money.

The old model of working and saving hard for 40 years in order to arrive at 65 with a big pile of cash served us well in the past.  Up until recently your typical life expectancy in retirement was around 10 years so your cash pile didn’t have to be too big.  However:

  • The average person in Ireland is living to 81 and rising.
  • If you are married and your spouse is about the same age, there is about a 40 to 45% chance of one of you living past 90.
  • There is a good chance that you are in a category that will beat the averages
  • With the stunning medical advances highlighted in the Time magazine article, these averages will rise exponentially.

Anyone for tennis at 100? 

The old model of financial and life planning must evolve in order to face this changing reality.  We won’t get into the depressing implications of all this on state and defined benefit pension schemes.  Like us, you probably switch off at the mere mention of “pension time bombs”!  The simple conclusion from any study of longevity is that we all have to take greater individual responsibility for our future livelihood.  The days of a benign employer or government arriving at our desk at 65 and paying for us to shuffle off into the sunset years is long gone.  We all need to plan in order to make the most of this amazing gift of longer life.

With this increased longevity in mind The Third Act is about facilitating a re-evaluation of your life goals .  In summary it is about helping you:

  • Find the things in life that you are passionate about.
  • Examine the opportunities available to you for a more sustainable lifestyle.
  • Start planning a transition into this new exciting stage of your life.

If you want an example of someone who has had an incredible third act (and now well into his 4th), look no further than Maurice Gaffney S.C. who will be 100 this year and still working as a barrister here in Dublin.  Maurice’s passion has been the people he worked with in the Law Library over the last 60 years.  He puts his longevity and success down to “being clever enough to choose a profession in which I met many wonderful people”.  Maurice is still enjoying a long and happy life because his work is his passion.

With this great gift of longevity we must ensure that we, like Maurice Gaffney take control of our working life.  We must strive to make our work more sustainable and fulfilling.  It takes time to analyse what parts of our lives inspire us and what we are best at.  We may have to plan a transition phase over time to focus on these areas of our careers.  This transition stage can be very challenging and frustrating.  You can read more about it at www.thethirdact.ie.

Finally an important part of this transition phase of life is mapping out your financial plan.  Until you capture all the messy and complicated detail of your personal finances and analyse it thoroughly (ably assisted by a Certified Financial Planner of course!) you will not be able to make life decisions with confidence.  Your financial plan will clarify what exactly needs to happen to ensure that you and your loved ones live the life you want without the fear of ever running out of money.  As Mark Twain said:

“Plan for the future because that is where you are going to spend the rest of your life”.