More and more people are living to 100 or longer. That means many Fools must save more and invest better if they want to enjoy their twilight years.
The world's oldest person, Maria Esther de Capovilla died last week aged 116. I very much hope I don't live that long, and the Death Clock website tells me I needn't worry. Apparently I'm going to die on Friday August 24, 2040 when I'll be 72. Thanks for the precision, guys!
My early predicted death is down to my love of pancakes, fry-ups, and other naughty foods. Many other British men of my age could expect to live a fair bit longer. Tables from the Government Actuary's Department show that the average 38 year-old UK male should live to 77. Back in 1981, the average 38 year-old was expected to die aged 73.
Don't forget, those figures are averages. Many will live longer and I expect new medical breakthroughs to drive up life expectancy further. I suspect that new drugs and technologies will make a bigger health impact than bulging waistlines. Indeed, there are several new drugs coming through which will help us fight the flab. So there's a good chance that you won't die until you're 80, 90 or even 116! And living that long will be expensive.
Equity release company Economic Lifestyle says that a woman retiring at 65 today will need around £440,000 to have a decent retirement; a man £367,000. And if, for example you're in your 30s now, you may well live longer than the average 65 year-old in 2006. So you'll need evenmore money than today's retirees and that's before you've considered inflation.
So what's the best approach?
Well, if you're younger than 65 and you're not saving any money, try your best to start now. No matter how small the sum. And if you're saving already, consider investing a larger amount of money each month.
What's more, if you're younger than 55, you should consider investing at least some of your savings in shares. That's because history suggests that the stock market delivers strong long-term returns. Look at this table:
Today's value of £100 invested at the end of 1990, gross income reinvested
| Asset Class | Nominal
£ | Real
£ |
|---|
| Equities | 234 | 160 |
| Gilts | 161 | 110 |
| Index-Linked Gilts | 205 | 140 |
| Treasury Bills | 29 | 20 |
| Corporate Bonds | 189 | 129 |
Source: Barclays Equity Gilt Study 2006
The simplest way to gain exposure to the UK stock market is to invest in a tracker fund. If your fund tracks the FTSE-100 index, you'll have exposure to the hundred largest companies on the London market, and they include pharma giants GlaxoSmithKline
(LSE: GSK)
and AstraZeneca
(LSE: AZN)
. If you think boffins will come up with plenty of new life-extending drugs, then those two companies should benefit.
But if you want to turbo-charge your savings and generate market-beating returns, think about buying individual shares. Be careful though, buying individual shares is significantly riskier than investing in a tracker.
If you're looking for share ideas, then why not take a free 30-day trial to Champion Shares, our online share-tipping service? You'll be able to read all of our 15 picks so far, and you'll receive our next tip as soon as it's published on September 13th.
Whatever approach you take, just remember that you could be retired for 30 years or more. You might even live to 116!
More: We Need £1m To Retire Comfortably | Biotech Beat: Two Of The Best
Thanks to Jack Uldrich for the concept for this article.
