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Why retirement scenarios matter, and how to shape yours

Thanks to advances in healthcare and medical research, Australians are blowing out more and more birthday candles than ever before. This record increase in longevity means we need to consider how to manage our money as the years tick past, but not enough of us are building our financial plan to cater for a specific life length. 

In this article, we’ll explore the factors that influence life expectancy and why it's important to consider different potential outcomes when planning for retirement. The good news is that with some thoughtful planning, you can have confidence that your money will last the distance, no matter how long you live.

50.5% of Australians over 50 expect to live beyond 86 and well into their 90s. Yet only 24% have planned to 91 and 28% haven’t built their plan to a specific life length.1

Over the past five decades, life expectancy in Australia has increased by 13.7 years for males (to 81.3) and by 11.2 years for females (to 85.4).2  These days, we’re benefitting from the sorts of social policies and medical progress our grandparents only dreamt of. Advances in healthcare—from new drugs to surgical techniques—over the past few decades have had a profound effect on life expectancy. 

Consider smoking: tobacco control measures introduced in Australia since 1956 have already saved almost 79,000 people from dying from a preventable lung cancer.3 Meanwhile, publicly funded healthcare, introduced in Australia as Medicare in 1984, has been shown to increase life expectancy by a decade in countries where universal healthcare has been introduced.4

And while genetics and circumstances play a role in determining the length and quality of our life, it’s increasingly clear that lifestyle factors can significantly extend not only lifespan but ‘health span,’ or the years we spend in good health. Healthy life expectancy in Australia—the number of years a person can expect to live in good health—has increased steadily over the past three decades to 70.0 years in Australia) in 2019, but it has not risen as much as overall life expectancy, suggesting that people are living more years in poor health.5

One major US study showed that there are five healthy habits that can lengthen life span (each individual habit is thought to add two to three years onto your lifespan)6: 

  1. Never smoking

  2. A healthy Body Mass Index (BMI)

  3. More than 30 minutes of moderate to vigorous physical activity per day

  4. Moderate alcohol intake  

  5. A good diet

 

And there is some overlap in the habits that are thought to reduce the gap between your number of healthy years and your number of years on the planet7: 

  • Plenty of exercise

  • A good diet

  • Sleep

  • Emotional health 

  • Medication and supplements, where necessary

 

While it pays to look after ourselves, looking after others helps too: volunteering has been found to lower stress, improve our social wellbeing and increase our satisfaction and quality of life.6

While life expectancy data gives us a useful snapshot, your personal life expectancy can vary significantly based on your current age, health, and lifestyle choices. The good news is that as you age continue to age, your life expectancy increases. For example, someone who reaches 65 can expect to live longer than what was predicted for them at birth. 

At age 65, for instance, men might expect to live until they’re 88, while women could expect closer to 90. By the time you reach 70, the numbers shift again. 

 

Scroll table horizontally on mobile

Adjusted life expentancy- 65 year old today
Percentile Male Female Couple
50th percentile / Median 88 90 94
75th percentile   94    95 97

 

  

Scroll table horizontally on mobile

Adjusted life expentancy- 42 year old today

(whos assumed to reach the milestone age of 65)
Percentile Male Female Couple
50th percentile / Median 91 92 95
75th percentile 96   96 99


Based on Austral Life Tables 2015-17, with 25-years mortality improvement factors – published by the Australian Government Actuary.


Plan to feel confident about your finances and future

Worrying about a money lasting is a common concern, and unless you’re handy with a crystal ball, it’s impossible to predict exactly how long you’ll live. We can do our best to improve our longevity outlook, but ultimately the only thing we can control about the future is the good planning we do now. Scenario planning is your secret weapon to building your confidence around whatever comes your way in retirement. By considering both optimistic and conservative scenarios, you can adjust your spending, investment strategy, and lifestyle to suit whatever comes your way. 

It’s essential to regularly reassess your income and expenditure projections. Doing so ensures your plan remains in step with your reality, helping you stay financially secure over time. Our My Retirement PlannerTM can help you model different scenarios to give you a clearer idea of how long your savings are likely to last and where potential gaps might arise. You can test various assumptions around inflation, returns on investments, and your own life expectancy to understand the impact on your income and savings. This kind of planning can help you identify areas where you might need to adjust your spending or look for additional income sources, such as part-time work or government benefits, ensuring you’re prepared for all eventualities.

My Retirement PlannerTM helps you maximise your savings to prepare for retirement. Simply start with including your estimated SASS retirement benefit balance and play with some different scenarios based on different paths you can take.  

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Next steps for SASS deferred members

If you’re a SASS deferred member, knowing your options can help you make sure you have the funds to suit your retirement lifestyle.

Next steps

Where to next?

Making the most of your SASS scheme at every life stage

Retire ready tips for busy SASS members

Retirement: then vs now

A financial planner's playbook for getting retirement ready

Market review and outlook

Back to Edition 18

Disclaimer

1 Allianz. Based on 850 respondents–62 percent of whom are aged 55-65, a smaller segment aged 45-55 and remainder already retired.

2 Australian Institute of Health and Welfare, Aussies are living longer than ever before, but will this trend continue?

3 Cancer Council NSW, Estimating the number of lung cancer deaths avoided by tobacco control

4 Journal of Global Health, Is life expectancy higher in countries and territories with publicly funded healthcare? 

5 University of New South Wales, Healthy life expectancy across Australia on the rise 

6 Royal Australian College of General Practitioners, How five simple lifestyle habits can extend life expectancy

7 The Telegraph UK, How to increase your healthspan by a decade

Issued by Aware Financial Services Australia Limited (ABN 86 003 742 756, AFSL 238430); wholly owned by' Aware Super (ABN 53 226 460 365).

General advice only. Consider if this is right for you having regard to your objectives, financial situation, or needs, which have not been accounted for in this information. Read the PDS and TMD before deciding to acquire, or continue to hold, any financial product. You should read the Financial Services Guide, before deciding about our financial planning services.