And people are living longer; according to the Office for National Statistics, a 65-year-old woman can expect to live until she is 87, while a man of the same age could expect to live until 85. So, their assets really have to sweat for a marathon of two or three decades, possibly longer.
But despite rampant inflation and stock market volatility, too many are unduly cautious, even miserly, living a too frugal retirement with few foreign holidays or other fripperies, scared that their often vast pension pots and other assets will run out before their days are done.
This is where the work of IFAs is vital with their cash flow analysis and financial coaching skills.
Yet some IFAs and wealth managers are just content to receive a percentage annual management fee (some would call it pound cost 'ravaging') on the size of dormant assets, often left untouched for years, rather than encourage their ageing clients to withdraw funds to spend some money on themselves or give money away to their children or to charities if they have no heirs.
This is not unusual, according to the Office for National Statistics one in five women in the UK never have children, while a staggering one in four men have no offspring – according to the usually reliable Guardian newspaper. No official figures are available for men as the ONS keeps no records on fathers.
Feel good, save tax
Giving away assets in your 60s, 70s and 80s can make you feel good and save tax today and tomorrow. Such gifts gain from the magic of Gift Aid, maintained at present rates until 2027, often shrinking higher and additional tax rate liability to zero.
Charities can claim an extra 25p from the government for every £1 you give. It works like this: you donate £100 to a charity, it claims Gift Aid to make your donation £125.
If you pay 40 per cent tax, you can then personally claim back £25.00 (£125 x 20 per cent) via a tax return. In Scotland, you can claim back slightly more as higher rate tax is 41 per cent. If you pay tax additional rates (45 per cent or 46 per cent in Scotland) the payback is even greater.
There are social security perks too. Most advisers tell their clients about pension perks. High earners with incomes around £50,000-£60,000 or more than £100,000, (from £43,663 in Scotland) can get even government benefits reinstated, such as child benefit or tax-free childcare if they give to charity.
Your income that is liable for tax is reduced by the amount you give. In return, your taxable income could then fall below the cut off points for these state benefits. This could become even more important in 2023 as stealth taxes drag more people into higher tax brackets.
