Growth Or Security.

Imagine 200 people, at birth. Current figures suggest that, on average, they will live to an age of 81 (let's say 80 for convenience sake). Theoretically, that average could be made up of 100 people living to 60 plus 100 people living to 100 years of age.

Let's fast forward to sixty years and one day later. Half the people have died and the remaining 100 people, who were told their life expectancy was 80, naturally think they have 20 years left. But they don't , they have twice that amount of time (40 years). So you see your life expectancy today is different to what it was at birth.

Many Australians, especially baby boomers, recently retired or soon to retire, will be surprised by these calculations.

A report titled Beyond Three Score Years and Ten: Prospects for Longevity in Australia by Heather Booth and Leonie Tickle calculates that a women aged 50 years can expect (on average) another 38.8 years and a man 34.4 years. Among baby boomers 34 per cent of men and 52 per cent of women can expect to see out 90 years of age.

Perhaps you have heard the black joke "if you retire with insufficient money just make sure you have a short retirement". Unfortunately, this joke contains a kernel of reality; because if you are at risk of living too long (is that possible?) you will need to maintain growth assets (because of inflation). Yet, they have a higher risk profile than secure, non growth assets.

Conventional wisdom tells us that, as we near retirement, our need for capital gain declines and our need for income is growing. For this reason accepted practice is to progressively replace growth assets with more secure ones like mortgage based securities, bank deposits etc. But, if you have a chance of making it closer to 100, inflation, over 3 or 4 decades, is going to seriously erode that capital.

So, the question is "do you stay with your growth assets, which are riskier than fixed interest securities, and take your chances, or do you go for greater safety and risk running out of money". This is a very serious question because age, illness and loss of skills etc, do not allow an opportunity to replace those lost assets.

Article Source: http://EzineArticles.com/?expert=Neil_Handley

About the writer -----------------------------------------------------------------------------
Neil Handley graduated as a Bachelor of Economics and Accountant. After some 20 years as a stock broker Neil turned to property development. He then acquired a controlling interest in a property development company listed on the stock exchange and became CEO. He has been involved in developing residential subdivisions, industrial subdivisions,shopping centres, office buildings and medium density residential dwellings in Sydney's north shore, Northern Districts, Parramatta and Liverpool areas and on the Gold Coast, Queensland. One office building was sold to the AMP for $25ml. Neil's company advises on building wealth via property.
Go to http://www.specialstrategies.com  .


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