The prospect of longer life expectancy poses both opportunities and challenges for retirement planning. Consider how retirement planning could be simplified if we could precisely forecast each client's life expectancy. With such information at our disposal, we could confidently provide advice on optimal investment strategies, anticipate the effects of inflation, and determine the appropriate timing and amount for withdrawals.
Factors such as health, beneficiaries, and market conditions impact withdrawal rates and investment strategies. Individuals in good health may adopt a conservative withdrawal approach, while those in poor health may opt for higher rates. Additionally, the duration of retirement, which could extend for decades, influences investment choices, necessitating a balance between low-risk options and exposure to growth assets. Furthermore, long-term considerations, including the impact of inflation, gain prominence, especially in the current economic landscape marked by elevated inflation rates and market volatility. Investors are adapting to this "new normal" by reassessing portfolio strategies to mitigate the effects of inflation.
Click here to read this Legal & General article about the impact of longevity on retirement planning.