RETIREMENT PLANNING: HOW TO PREPARE FOR THE LONGEVITY MEGATREND

As 2025 takes root, we ponder what the next 12 months may hold for us as individuals and investors. One thing is for certain – some familiar challenges lie ahead.

The International Monetary Fund (IMF) unveiled its latest economic assessment the week prior to the US election, proclaiming a period of ‘stable but underwhelming’ global growth for the year ahead. The update also predicted a return to a more neutral monetary policy stance as inflation in most economies steadily falls towards target in 2025.

The report acknowledged ‘exceptional’ levels of uncertainty, which Donald Trump’s subsequent return to the White House has done little to ease. Quantifying the impact of the Republican’s victory is difficult at this stage, but a return to US protectionism and the prospect of trade wars certainly pose a threat to the global economy.

A GLOBAL PHENOMENON

The IMF forecast also highlighted some structural challenges that are expected to temper global growth, with an ageing population amongst the most prominent. As well as impacting the economy and presenting an investment theme to capitalise on, the unfolding longevity megatrend is a global phenomenon. That presents a financial challenge at a personal level too as we consider planning for retirement while living longer.

LIFE GOALS & RETIREMENT PLANNING

Research by Canada Life suggests most of us are vague when it comes to financing increased longevity – less than a third of 55 to 64-year-olds, for example, currently prioritise funding retirement. Preparation and setting life goals typically makes us feel more in control of, and optimistic about, our futures and is undoubtedly key to confronting the realities and practicalities of living longer. Such targets, though, do need to be focused beyond current life stages.

TALK, SUPPORT, PLAN, LIVE

Encouragingly, the research also found that people who use an adviser tend to be better prepared for later-life eventualities, whether that be financing retirement or providing support for loved ones. Considerations extend to emotional and practical, as well as financial. Another element of longevity is successful communication. Advice helps clients successfully navigate the financial landscape as well as encouraging them to engage family in financial conversations. We can support you on all counts – it’s all in the planning!

KEY TAKEAWAYS

The IMF expects us to enter a period of 'stable but underwhelming' global growth.

Most people aren't properly prepared to fund a long life.

Engaging with a financial adviser helps you be better prepared for the later stages of your financial lifecycle.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.