Plan early for your second 50 years

A NEW guide explains how people’s second life begins at 50, and reinforces the need to think about financial factors earlier than previous generations.

Living a healthier and longer life is going to cost more money.

AUSTRALIANS are being urged to reinvent retirement, and it starts with seeing age 50 as only the halfway point of our lives.

Rapidly-rising life expectancies are opening doors to new careers, hobbies and experiences for people aged 50 and beyond, but advisers warn that this means financial factors must be considered earlier than in the past.

Financial giant Perpetual, which has launched a new guide to living a rich life from 50 to 100, says more years were added to life expectancy in the 20th century than all the years of prior human evolution combined. One in five Australians now aged 65 will live to 97, it says.

Perpetual says planning for “your second wind” starts in 40s with adequate insurance and an investment plan, retirement planning gets serious in your 50s, and beyond 60 factors such as charitable giving, business succession, investment management and lifestyle assistance come into play.

Perpetual Private group executive Mark Smith believes the reinvention of retirement “has been happening under the covers for about 10 years”.

He says by 2041, 23 per cent of Australians will be over age 65. “An enormous segment of the population will be looking for ways to live a rich and fulfilled life.”

The financial strategy for older people used to be putting all their money into stable, secure funds. “Now the conversation is if you are living to 100, how do you grow your capital over that time?” says Smith.

“It’s about rethinking aspirations and goals you set … It’s sometimes hard to look objectively at it, so sit down with someone you have trusted over time, such as a life mentor, accountant or adviser.” Aspirations can be changed not just in a financial sense but also across careers, goals and travel.

Planning for Prosperity financial adviser Daniel Budreika says most people start to think about later-life finances from about age 40.

“If you leave it late, it’s harder to make changes,” he says.

Budreika says he is concerned that many of today’s Baby Boomers will have to scale back their lifestyle expectations amid forecasts they will live much longer than they previously expected.

“They will have to be more realistic about the retirement income they generate and what that’s going to mean. Know what your cost of living is and then factor in money for holidays.

“It’s about feeling comfortable with what you are doing, having a plan and knowing why you are doing it.”

Perpetual’s Smith says people should not follow the traditional route of leaving retirement planning until the final five years of work.

He says even if you are years from retiring, now is a good time to check your current finances, draw up a list of assets and debts and consider how they will change in the future, review your personal insurance and “eliminate future uncertainty” by sorting out estate planning.

“Improvements in health, food, diet and exercise are leading to a generation living for longer than every generation before them. They are active and want to taste the world. Their thirst for adventure and holidays is top of mind,” Smith says.