I have a very special client who became a centenarian on the 2nd of January 2021. Join me in wishing her a wonderful year and more happy, healthy returns. She has a sharp mind and wit and whilst not capable of jogging around the block, serves as a wonderful beacon of the future that awaits many of us. Longevity, as understood in times gone by, is no longer the same. Our shared responsibility, whilst we are being troubled by the advent of a very strong flu which has threatened the world, is to take in the new reality that a lifespan limited to three score and ten no longer applies and do something about it.
Historically, common cause was that as you approached retirement, you took risk-averse decisions, placed the majority of your savings into cash or near cash investments and survived reasonably comfortably, until you left this mortal coil. That wouldn’t be very long, typically five or 10 years, and if your health was irritatingly good, you might have to have your kids bat you around their spare room for a few years longer!
Advances in medicine, genetics or a number of changes have resulted in life expectancy improving rather dramatically. This, coupled with the very material reduction over the last number of years in interest rates (we call it yield) has forced conservative investors into considering more growth-oriented investments. Clearly with these greater probabilities of growth comes a risk of greater volatility. This is reasonably easy to manage, and by “not putting all your eggs in one basket”, you can leave enough to provide income for a few years, in safe (boring/low yielding) investments, with the balance deployed across local and foreign growth-oriented portfolios.
Of great importance is your willingness to engage, and just as we need to keep you updated and informed, so must you inform us of changes to your circumstance, which might support a review of risk and return in either direction.
It gives me great pleasure as Chair of NFB and NFB Asset Management to recognise the excellent collaboration of these two entities in shaping solutions which can meet almost any required risk/return profile. Noted specifically in a recently published Financial Mail, a piece by deputy editor Stephen Cranston, singles us out as a great and rather rare example of a wealth business with proper capacity to choose, review, blend and price investments for our clients, whilst delivering service and advice and being objective in this process. If you would like to read the article, click here.So, quite obviously we are generally living longer. The question is: “So what?”. If my advice is correct, we can, together, shape a portfolio to better deal with this changing probability. What else changes?
You might have a period of almost the same as your 20 to 60 years old, still to come! What you do, who you do it with, and if it delivers income to you perhaps, are equally important. Talking about this to your partner, family, advisor, mates takes place far too little. Many of the current retirees come from a ‘cowboys don’t cry’ generation. Living longer might have roles changing where traditionally older males become very reliant on spouses. Costs such as medical costs are on different trajectories to general inflation. How Powers of Attorney work (and don’t) is important. We also generally promote a donation of some assets to ensure spouses are independent should either become incapacitated or pass away.
Enough of technical stuff. What about PURPOSE. I wrote some time ago of a wonderful cultural thing called “Ikigai”. Translated it broadly means Life Purpose. Common in certain Japanese areas, it is best described as everyone having roles to play in the community, irrespective of age, sex or qualification. Every day you wake with a purpose. This might range from tending to the livestock, sweeping, looking after children but everyone is seen as part of the big picture.
There are few periods in history, no matter how dark the horizon, where this hasn’t been good advice.
Finally, and continuing my review of previously mentioned concepts, Oxytocin! I recently saw a clip which displayed this important, and easily neglected powerhouse, brilliantly. Oxytocin is a substance released by our physiological systems. This happens most often when we perform a random, kind or generous act for others. I saw the article that reminded me of Oxytocin on the TED talk below:
We are blessed to be living in a place that is beautiful, bountiful with awesome people, nature, weather and opportunity. I am often told that I am a “glass half full” guy. Whilst probably true, pragmatism, experience and political disappointment have resulted in me remaining here but advocating Global diversification to all who can afford this luxury.
Stay well and please remain safe as we approach our winter. NFB is operating under Level 1 restrictions, so we are available to meet in person, or by electronic means. We are here to give focused advice but are also part of the community. If you need help, please reach out. We have limitations to what is possible, but I remain very proud of the team, its caring nature and willingness to contribute. Thank you for your support and staying the chase in what have been very testing times.