The number of over-65s choosing to work beyond the traditional retirement cut-off point has been growing since the abolition of the default retirement age in October 2011. In fact, according to the latest research by Scottish Widows, an estimated 1.1 million traditional retirees are now choosing to keep working past the age of 65. But are they doing it out of choice or necessity?
Well, some people are definitely choosing to work because they truly want to. The research revealed that more than a third (34%) of respondents aged over 55 plan to continue working past the age of 65, and of these, 54% said that they made this decision because they simply didn't feel 'old' enough to hang up their work boots just yet. What's more, a further 24% declared that they enjoy their job and therefore want to continue at the grindstone in order to further their professional development.
Some respondents also stated that extending their working lives was beneficial to their family life: one in five men (17%) and one in 10 women admitted that having independent time improved their familial relationships, something that they felt retirement could jeopardise.
However, not all older workers are willing ones. Financial pressures also clearly play a part, with older relatives and children often in need of significant financial support, which could put pre-retirees' finances under strain. Indeed, a fifth of respondents admitted that they were to continue working to provide financial help to their family.
The need to top up a pension pot and clear outstanding financial obligations was also riding high in many respondents' minds: 44% of over-55s who said that they would toil beyond the age of 65 confessed that they needed the extra money to supplement their pension, and another 13% admitted that they still had debts, such as a mortgage, to pay off before they could finally take their retirement.
Clearly, while the growing number of older workers is not necessarily a bad thing, there is a definite emerging gulf between those who choose to work because they enjoy it and those who do it because their finances simply won't let them do otherwise. So, if you decide to work beyond the age of 65, how can you ensure that you do so willingly?
Make it a choice, not a necessity
Well, gathering together a decent amount of pension savings is the key. Starting early is the best way to accrue the funds for a comfortable retirement, so if you aren't already saving into a pension, sign up! Paying into your workplace scheme means that you can benefit from employer contributions, so why pass up that free money? If auto-enrolment hasn't come your way just yet, putting aside some money into a savings account is the next best thing. A regular saver may be ideal, as it will help you to get into the saving habit, while a cash ISA will help maximise your tax efficiency. Even if you are already paying into a pension, putting aside some cash for the future is no bad thing.
If retirement is beckoning, find out what your financial footing is and how you can best maximise your savings to give you the retirement you deserve. Pension Wise can be a great first port of call, giving you the guidance you need to start your research. The nest step should ideally be consulting an independent financial adviser: they can examine all of your savings and retirement needs and find the best solution for you. Who knows, by making the right preparations and getting solid plans put in place, you could find that deciding when to retire is an easy decision to make.
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