When do you plan to retire? As the government is gradually raising the ‘official’ to 67 by the year 2028, you may think the wait to give up full time work for good is further and further away.
However, you don’t have to retire at 67; it’s just the age when you can access your State Pension. You can retire whenever you like, if you have the right retirement planning in place to fully support the retirement lifestyle you want.
It’s a worrying statistic that 35% of women and 20% of men aged over 50 do not have a private pension. Overall, 33% of the over-50s do not think they will have sufficient income for their retirement, and that can be deeply worrying for them.
More options than you might expect
The COVID pandemic has caused many people to look at their working lives, and realising that there are more options than they realised. Suddenly, working from home is the norm not a nicety. Flexible working, staggered hours and even cutting out the whole office experience entirely has become a way to help keep employees safe, productive and engaged. It’s not an ‘all or nothing’ world of work anymore for any age group.
It’s one reason why a staggered retirement approach is not just desirable, it’s also very possible. Today, the most common path into retirement is to go ‘cold turkey’ and simply stop working. However, other have opted for a staggered approach, gradually reducing the working hours and working part-time. A study (1) recently showed how popular this flexible approach is, with early one in three (32%) pensioners in their 60s and 16% of over-70s having never touched their pensions.
Of these no-spenders:
- 51% say it is because they are still working
- 25% of people in their 60s said it is because they want their pensions to last as long as possible
Staggered retirement and health
A staggered retirement may also be good for your health. The benefits of working – such as remaining physically active and continued social interaction – can make a big difference to your mental wellbeing and overall health in retirement. So will the reassurance of a modest income, which in turn allows you to make your pension savings work past retirement age, to potentially generate growth above inflation.
Why keep your retirement fund invested
If you have an income which can support your part-time retirement. you still need to think about how to fund full-time retirement once you’ve cleared your desk for the final time. You also need to think about how you can continue to generate income from your investments throughout your retirement years, which can be a considerable time.
You might live more than 30 years once retired, and there is a risk that you could outlive your savings. You may not want to be tempted with an attractive redundancy offer or generous incentive to quit work early if your retirement income won’t be sufficient without a job. It goes without saying that once you have retired you’ll want your retirement nest egg to last as long as possible. And in turn, that nest egg may need to stretch further than you’d thought when you first started saving for retirement.
What you don’t want to do is spend your entire retirement worrying about money, and not enjoying the lifestyle you wanted and worked so hard for. That’s where comprehensive retirement planning comes into its own. Planning for retirement ensures you know how much you need to retire with to lead the the lifestyle you want, when you want.
Curb your appetite
Retirement is not a time to take risks with your money. You don’t want your investments to be all at sea when all you want to do is sail around the world. Making the right investment decisions can help you increase your financial security, decrease your exposure to risk, and provide income that you can use to live comfortably after you stop working. You should seek professional financial advice on this. Panthera LIFE is not able to provide financial advice, but Paul Hammond can –
Next stop, Panthera LIFE
If you want to find out if a staggered retirement approach is right for you:
(1) Research from LV survey of more than 1,000 adults aged over 50 with defined contributions