Could a £40 test help you to save?

PUBLISHED: 09:27 12 October 2018

Life expectancy rose during the first part of the 20th century. Picture: Getty Images

Life expectancy rose during the first part of the 20th century. Picture: Getty Images

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In this week’s column, Peter Sharkey looks at what impact a rising life expectancy has on your savings.

Most of us want to enjoy retirement to the full so saving early and building in flexibility is key. Picture: Getty ImagesMost of us want to enjoy retirement to the full so saving early and building in flexibility is key. Picture: Getty Images

There’s not much you can buy for £40. A new shirt perhaps; a midweek Indian curry for two (with limited drinks); just over half a tank of fuel. The cost of watching a top-flight football match will set you back at least £55 and following the addition of those ubiquitous ‘admin fees’, a pair of theatre tickets, or entry to a music gig comfortably exceeds forty quid.

Though the options of how to spend it are increasingly limited, however, the figure is not an arbitrary one.

On Tuesday, it was reported that a simple £40 test could identify, at birth, youngsters who were most likely to develop heart disease. This was the conclusion of a DNA-related study completed by Cambridge University. In short, instead of waiting to thoroughly examine people in their 40s and 50s, scientists believe the £40 test could soon be administered to those in their twenties with the intention of saving and extending lives.

Great news, although it comes with longer-term implications.

Almost all nations make long term pension projections based upon actuarial calculations of life expectancy. Unless you’ve been on the moon for the past few years, you will know that the UK’s population has been living well beyond what actuaries believed possible even thirty or forty years’ ago. The most dramatic rise in life expectancy occurred between 1900-50, pre-dating the birth of the NHS, and while it slowed in the subsequent half century, the rate of increase continues to edge upwards. Gauging how much further it will rise is part of the actuary’s job, but this element of the human longevity calculation often comprises a large dollop of guesswork.

Very few people, scientists and actuaries included, could have foreseen the significant advances in medical treatment, coupled with the corresponding effectiveness of drugs and an overall improvement in health, that occurred over the past fifty years. It’s incredible to think that the first human heart transplant took place as recently as December 1967; today, it’s almost a routine operation. The same is true of many procedures which in the mid-sixties appeared the stuff of science fiction.

This begs an obvious question: what if life expectancy continues to improve as a result of further scientific and medical advances? After all, there’s no slowing-down in the volume of research into diseases of all descriptions.

Are we that far away from finding a cure for cancer or heart disease, or discovering drugs capable of preventing any number of chronic diseases, from cystic fibrosis to arthritis, dementia to diabetes?

Only last week, stock market-listed Oxford BioMedica agreed a deal with France’s Bioverativ and Axovant to develop their gene therapies for haemophilia and Parkinson’s Disease. The potential commercial rewards of corporate success in these fields are enormous, while people suffering from either disease could be on the verge of witnessing a dramatic improvement in their lives.

This short digression into the possibilities afforded by continued medical research may appear a tad obscure, but the purpose is to highlight the fact that today’s calculations of life expectancy, made in good faith and allowing for a significant margin of error, could be hopelessly out of date within a decade or two.

Assuming they’re not, then the calculations will prove entirely accurate and the state pension will be adequately funded until, well, April 2033, beyond which we can expect regular increases in the retirement age (for further details, use the pension clock).

But what if a succession of dramatic medical advances, which no-one foresaw, result in life expectancy improving by another five, or even ten years over the next eighty? Far-fetched? Hardly. In the eighty years between 1931-2011, female life expectancy rose from 63 to 83; that of males increased from 58.7 to 79.

Readers inclined to err on the side of caution will recognise the implications of extended life expectancy on all manner of financial planning, from renting a home to getting a mortgage; buying a car or planning for retirement.

Moreover, if our savings, whether in ISAs, pensions or elsewhere are ultimately to be converted into an income stream over an indefinite period of time, what happens if that already indeterminate period is extended by a few years?

No-one wants to run out of money later in retirement, especially when the prospect of expensive care-related costs begins to loom large. Conversely, most of us want to enjoy retirement to the full.

There’s no correct answer to retirement planning, but that it needs to start early and have built-in flexibility is a given. It follows that, like the proposal to introduce a £40 test for coronary disease to much younger adults, the sooner those same people start saving, the better.


•25 years

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Prepaid currency cards are a popular alternative to carrying cash or using a debit card abroad, but should you fail to use them for a period of time, you’re likely to be charged a ‘dormancy fee’ of around £8. Travellers cheques, anyone?

Check out Peter Sharkey’s regular financial column, The Week In Numbers, for more financial advice.

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