We Are Living Longer — But Are We Planning for It?
A child born in the UK today has a roughly one-in-three chance of reaching 100. A healthy 65-year-old has a better than even chance of reaching 87 (for men) or 89 (for women), according to the Office for National Statistics. Life expectancy at birth has increased by nearly a decade since the 1970s, and while the rate of improvement has slowed in recent years, the direction of travel is clear: we are living longer than any previous generation.
This should be unambiguously good news. And yet, for many families, it creates a set of financial challenges that their current plans are simply not designed to handle. Retirement pots that were supposed to last 20 years may need to last 30. Care costs that were once a remote possibility are becoming a near-certainty. And estate plans that assumed death at 75 may need to work at 95.
The longevity dividend — the extra years of life that modern medicine and public health have given us — is real. But it only becomes a dividend if we plan for it. Without planning, it is simply a longer period of financial uncertainty.
The Retirement Maths
Most retirement planning is built on assumptions about how long you will live. Those assumptions are often too conservative. A couple who both retire at 65 and assume they will need income until 85 are planning for 20 years of retirement. If one of them lives to 95, they need income for 30 years — a 50 per cent increase.
The impact on pension drawdown is significant. A pension pot of £500,000, drawn down at £25,000 per year with modest investment growth, will last approximately 25 years. If the drawdown period extends to 30 or 35 years, the pot either runs out or the annual income needs to be reduced substantially.
The state pension — currently £11,502 per year for the full new state pension — provides a baseline, but it is rarely enough on its own. And with the state pension age set to rise to 67 by 2028 and likely to increase further in subsequent decades, the gap between retirement and the start of state pension payments is growing for those who retire early.
The Care Cost Question
One of the most significant financial risks of a longer life is the cost of care. According to Age UK, around one in ten people over 65 will face care costs exceeding £100,000 during their lifetime. The average cost of a residential care home in England is approximately £40,000 per year; nursing care averages around £55,000 per year. In London and the South East, figures are often considerably higher.
The government’s social care reforms — including the planned £86,000 cap on personal care costs — have been delayed repeatedly and, as of mid-2026, there is no confirmed implementation date. Until the cap is in place, individuals remain exposed to potentially unlimited care costs.
For families with property and savings, this creates a genuine dilemma. The family home — often the largest single asset — may need to be sold to fund care. Local authority means testing takes into account almost all assets, including property (unless a qualifying dependant is still living in it). The result is that families who have saved and invested prudently can find their wealth consumed by care costs, while those with fewer assets receive state-funded care.
What Longer Lives Mean for Estate Planning
Gifts May Come Too Late
The seven-year rule for potentially exempt transfers (PETs) means that gifts made within seven years of death may still be subject to inheritance tax. If you plan to make significant gifts to reduce your estate, the earlier you start, the more likely those gifts will fall outside the seven-year window. Living longer gives you more time to make gifts — but only if you start early enough.
Wills Need More Flexibility
A will written at 55 may need to serve for 40 years. Over that period, family circumstances will change — children will marry, divorce, have their own children; grandchildren will be born; beneficiaries may develop their own financial problems or health issues. A rigid will that makes fixed gifts to named individuals may produce inappropriate outcomes decades later.
Trusts within a will — particularly discretionary trusts — provide the flexibility to adapt to changing circumstances. They allow trustees to respond to the needs of beneficiaries as they arise, rather than being locked into decisions made decades earlier.
Lasting Powers of Attorney Become More Important
The longer you live, the greater the probability that you will experience a period of reduced mental capacity. Dementia affects approximately one in fourteen people over 65 and one in six over 80. A Lasting Power of Attorney (LPA) for both property and financial affairs and health and welfare is essential — and it must be put in place while you still have capacity to do so.
Without an LPA, your family may need to apply to the Court of Protection for a deputyship order — a process that is slow, expensive, and restrictive. An LPA is simpler, cheaper, and gives you control over who makes decisions on your behalf.
The Emotional Dimension
Longevity is not just a financial issue. Living to 90 or beyond often means outliving your spouse, your siblings, and many of your friends. It can mean years of increasing isolation, reduced mobility, and dependence on others. The psychological toll of a long life without adequate social connection, purpose, or autonomy is well-documented.
Planning for a longer life is therefore not just about money. It is about maintaining quality of life — staying physically active, socially connected, mentally stimulated, and emotionally supported. The best financial plan in the world is of limited value if the person it is designed to protect is lonely, bored, or depressed.
Practical Steps
1. Stress-Test Your Retirement Plan
Ask your financial adviser to model your retirement income assuming you live to 95, not 85. How does the picture change? Are there adjustments you can make now — increasing contributions, adjusting your investment strategy, or planning a phased retirement — that would improve the outcome?
2. Investigate Care Cost Insurance
Pre-funded care plans and immediate needs annuities can protect against the risk of unlimited care costs. They are not cheap, but they provide certainty — and certainty has a value that is difficult to quantify until you need it.
3. Start Gifting Early
If you have surplus wealth that you will not need in your lifetime, consider a structured gifting programme. Use your annual exemptions, make gifts out of surplus income, and consider larger gifts that will fall outside the seven-year window. The earlier you start, the more effective the strategy.
4. Build Flexibility Into Your Estate Plan
Use trusts, letters of wishes, and regular reviews to ensure your estate plan can adapt as your circumstances and your family’s circumstances change over time.
5. Put LPAs in Place Now
Do not wait until you need them. LPAs must be registered before they can be used, and the registration process takes several weeks. Having them in place early means they are ready when — not if — they are needed.
The Bottom Line
Living longer is a privilege. But it is a privilege that comes with financial responsibilities that previous generations did not face. The families who benefit most from the longevity dividend are those who plan for it — not just financially, but emotionally and practically.
To review your estate plan and ensure it is built for a longer life, contact The Legacy Wills Company.