Here’s what living to 100 means for your investment portfolio

The successful families we work with have one eye on the future — in particular, a retirement that is both prosperous and active . But how many years in this autumn chapter of our lives might we be talking about, since advances in medicine and technology make it more likely we will live longer? It is exciting to be able to challenge our assumptions of what is possible to achieve in our senior years — where we can travel, how we can give back. But it also means redrawing the map on our investment strategy . There is an old rule of thumb regarding asset allocation in retirement . Subtract your age from 100, and that is the percentage you should have in equities. Under that rule, a 70-year-old should have 30 per cent of his or her portfolio in stocks. But that rule can’t hold true if a healthy adult has a chance of living to 100. That 70-year-old needs to plan for 30 more years, which means staying invested in stocks to generate the growth needed to combat the silent killer — inflation. Since some 70-year-olds are as healthy as people 20 years their junior, many are now thinking about their “biological age” (a measure of health), not simply number of years on Earth. How healthy you are is only part of the asset allocation puzzle. You may also need to consider sophisticated strategies involving trusts and estate planning — all of which will depend on your wealth, tax situation, philanthropic interests and risk tolerance. The goal is to make your money last, sometimes into your grandchildren’s generation. The potential for a longer, healthier life creates additional incentives to work beyond the standard retirement age. Doing so can boost your savings and give your portfolio more time to grow before you begin withdrawing funds. Plus, there are benefits to staying active. Concerns about running out of money in old age are justified. From 1960 to 2015, total life expectancy (combined male and female) in the US increased by about 10 years. It is projected to increase another six years from 2016 to 2060 to reach 85.6 years. Add to this rising inflation and last year’s weak stock and bond markets, and even disciplined savers are worried. More than a third of millionaires believe that “it will take a miracle” to achieve a secure retirement, according to a 2022 study of high-net-worth investors. Yes, that is millionaires. In addition to boosting the growth requirement on their portfolio, retirees at all wealth levels need to keep tabs on both their spending and some big potential expenditures, the biggest of which is arguably health care. A 2022 Fidelity Investments report found that a 65-year-old couple can expect to spend an average of $315,000 in medical expenses throughout retirement. Deciding where to live in retirement can also have an impact on budgeting, spending and expenditure, so plan this early. Many choose to move to warmer climes with lower costs of living, but are the medical services on hand what you have become accustomed to or might you potentially incur the cost of being a medical tourist elsewhere? Preventing illnesses that would require treatment and maintaining a healthy lifestyle can help keep those costs down for the early years of retirement. Experts add that the key factor for well-being in retirement is to remain socially active. Get a hobby, volunteer, meet friends regularly. There are significant benefits. The Harvard Study of Adult Development, which has been tracking a group of adults and their descendants for 85 years, has found that close personal connections are instrumental in both longevity and physical and mental health. It is about ensuring your physical and emotional needs can both be met. Our motto is “healthy, wealthy and wise”. By retirement, you will have the third of these three. But when planning for it, invest both in your wealth portfolio, as well as a social portfolio. After all, if you are going to live to 100, you want to have close personal relationships and enough money to ensure you can make the most of both. Sam Instone is co-chief executive of wealth management company AES