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Projected life expectancy creates a funding problem

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Projected life expectancy creates a funding problem

By , April 8, 2010

According to newly released treasury research – the aging population issue is becoming a serious funding issue – a combination of improving medical technology & healthier lifestyles has led to the average 65 year old retiree living another 20 years. But a good portion of people – one in five will live for another 10 years beyond that, so they will have 30 years in retirement. And a further one in 10 will have 40 years in retirement.

It is not easy to plan (especially financially) for a 40 year retirement timeframe. Studies by Macquarie show one big market slide – such as the one we have just endured – can take 10 years off the life of the most popular retirement income solution, an account-based pension. And markets do not always bounce back rapidly.

A key component of retirement planning needs to be financial planning and business owners need to consider the implications of this funding issue on the exit strategy for their business to ensure the wealth they require in retirement is successfully extracted from their business and other investments.

Australian Projected Life expectancy ( years )
Life expectancy at birth 2010 2020 2030 2040 2050
Men 80.1 82.5 84.5 86.1 87.7
Women 84.4 86.2 87.8 89.2 90.5
Life expectancy at Age 60
Men 23.4 25.2 26.7 28 29.2
Women 26.6 27.9 29.2 30.4 31.4
Life expectancy at Age 67
Men 17.6 19.1 20.4 21.6 22.6
Women 20.4 21.6 22.8 23.8 24.8

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.