We talk a lot about life expectancy in the world of Financial Planning, but perhaps healthy life expectancy is a more important consideration.
I got thinking about this after listening to Call You & Yours on BBC Radio 4 at lunchtime, driving home from a client meeting.
The topic today was asking listeners if they could afford to retire.
Over 50s make up a third of the UK population and, if you believe the statistics, they are wealthier and healthier than ever.
Call You & Yours featured a call-in with Dr Ros Altmann, recently appointed as the government’s Older Workers’ Champion, who argued all this longevity and vigour means we need to rethink retirement.
One of the callers to the show made the excellent point that many people cannot continue to work in their fifties and sixties, due to poor health or disability.
This raises the importance of healthy life expectancy.
Rather helpfully, the Office for National Statistics (ONS) published their latest Disability Free Life Expectancy (DFLE) for Upper Tier Local Authorities in England, with comparisons between the 2009-11 and 2006-08 data.
This found that there was an increase in the proportion of life spent with a disability at birth for both males and females.
However, at age 65 the reverse was true; men and women could both expect to spend over half a year longer free of disability, thanks to life expectancy outpacing disabilities.
By disability, the ONS means a persistent illness or condition that limits day to day activities, such as being able to work.
Here are some extracts from the ONS findings:
In 2009-11 males could expect to spend almost a fifth (19.0%) of their life with a disability, an increase from 14.6 to 15.0 years compared with 2006-08.
For males, life expectancy increased by 1.0 year (77.9 to 78.9 years) whereas DFLE increased by 0.6 years (63.3 to 63.9 years).
The increases in the proportion of life spent living with a disability occurred because the improvement in life expectancy exceeded that of DFLE.
In 2009-11 females could expect to spend 22.2% of their life with a disability, an increase from 17.5 to 18.4 years compared with 2006-08.
For females, life expectancy increased by 0.9 years (82.0 to 82.9 years) whereas DFLE decreased by 0.1 years (64.5 to 64.4 years).
So overall, things seem to be improving. The length of time we are expected to live without a disability which limits daily living is increasing.
However, look at the average ages when men and women might expect to start living with such a disability; 63.9 years and 64.4 years respectively. In both cases, these are much lower than the proposed new state pension ages.
And of course they are averages which hide a number of different real life experiences.
The statistics mean a great many people will experience a disability, curbing their ability to work and earn money for daily living costs and future retirement planning, a long time before the state pension kicks in.
What these statistics tell us is a) it is great to have the choice to continue working in later life, for all sorts of reasons in addition to the economic benefits, and b) many people will be unable to continue working as late as a traditional retirement age of 65, let alone a new retirement age of 68 or older.
This means it is essential to have the financial resources at your disposal to give you the means to retire earlier than the state thinks is a reasonable age.
