Taking a more gradual approach to retirement
The nature of retirement has changed – it is no longer a matter of leaving the workplace with a golden carriage clock and entering a quiet life of leisure.
According to research from LV=, many people are taking a more gradual approach to retirement and are working beyond the State Pension age, slowly cutting back their
UK adults who are in employment in their sixties are working an average of 24 hours, having cut down their hours over the years. Of those over 60s who are still working, a third (35%) want to phase their retirement, which could lead to them working part-time or taking on consulting and voluntary roles to ease themselves into retirement.
There are many reasons for the rise in ‘part-time pensioners’. For some, there is a financial element that impacts on their decision to work past state retirement age, with almost half (49%) remaining in the workplace to boost their retirement income. However, the key reasons people choose not to retire are because they enjoy working (52%) and feel that they are far too young to stop (46%). In fact, when asked how old they feel, three quarters (75%) of those aged 60+ felt much younger than they are.
It would seem that over 60s refuse to be constrained by their age. The research revealed a particular group of modern day ‘grand-trepreneurs’ – adults of State Pension age who are choosing to use their new-found freedom to set up or invest in businesses. Over a quarter (28%) of those who are working into later life run their own business, with one in five (21%) of these starting up when the entrepreneur was in their sixties. At the same time, since semi-retiring, close to a third (32%) have switched careers to try something new.
In fact, wanting to ‘have something to do’ (45%) and a desire ‘to feel useful’ (25%) are the key drivers behind the UK’s ‘grand-trepreneruial’ spirit, suggesting this is an ambitious group who believe they still have a lot to offer.
It would seem that when it comes to work, the over 60s are the real ‘boomerang generation’. The findings show that there is a trend to ‘un-retire’, with many retirees returning back to work. One in six (15%) of those in their 60s have returned to work after retiring – equating to one million workers. Although some over 60s come out of retirement to give their retirement income a boost (49%), there are many who go back to work
to avoid boredom (39%).
Interestingly, while many are working longer, returning to work or delaying taking their private pension to boost their retirement income, very few consider taking their State Pension later. Just one in 20 (5%) of those working past retirement age have deferred their State Pension, despite the fact that this would increase the value of their State Pension by 10.4% a year.
For many people, working for longer is a positive choice. Many people in their sixties and seventies enjoy their jobs and are keen to remain active in later life. However, for others their financial situation means they have to continue working – or even go back to work after retiring – because they simply cannot afford to stop.
Make sure you select the best retirement income options
With the nature of retirement changing, it is important that you have the income flexibility you need in your later life. With this in mind obtaining professional financial advice will ensure that you are able to make the most of your savings and pension funds and select the best retirement income options for your individual circumstances. For more information, please contact us.
The State Pension age is currently 65 for men and 61 and 9 months for women
By late sixties, we are referring to those aged 65–69
A part-time worker is someone who works fewer hours than a full-time worker. There is no specific number of hours that makes someone full- or part-time, but a full-time worker will usually work 35 hours or more a week, according to https://www.gov.uk/part-time-worker-rights
According to Opinium, 1,047,690 adults aged 60 and over who had previously retired had to return back to work. There are 6,984,600 adults aged 60–69 according to ONS, and of these 15% returned back to work after retiring – 15% of 6,984,600 = 1,047,690.
Pensions Minister, Steve Webb MP, has announced that for those retiring after April 2016, deferring when they take their benefits will increase the value of their State Pension by 5.8% a year.