Is it your dream to give up work as soon as retirement hits, or are you hoping to stay in the workplace for a bit longer? Will you work part-time, full-time or on a temporary basis, for a few more months, several years or even throughout your retirement? If so, you're not alone.
A phased retirement is set to become the new norm, as retirees are increasingly choosing to stay in work rather than make a clean break when their retirement date hits. According to Aegon's latest Retirement Readiness Survey, just 29% of UK workers believe that they'll leave work completely when it's time to retire, with 36% instead anticipating that they'll continue working on a part-time or temporary basis. A further 14% are expecting to work in some capacity throughout their retirement – quite literally, they think that they'll work till they drop.
But just why are people making the decision to stay in work? Well, for many, the key reasons will be financial. People are living longer, which means securing a decent retirement income is becoming an even bigger challenge, and many people simply don't have the pension pot there to generate the kind of comfortable lifestyle they're hoping for.
It's therefore not a huge surprise that many people are choosing to work at least part-time in their retirement, but what is surprising is that few have a solid plan of how they're going to fund their golden years. In fact, just 12% of those surveyed have a financial plan for retirement written down, while 39% don't have any plan whatsoever.
The fact that retirements are becoming longer means it's even more important to plan ahead. You wouldn't want to get 10 or 20 years into your retirement only to find you'd spent your retirement pot, so having a clear plan in place – whether it's purchasing an annuity, opting for income drawdown, investing or working to supplement your income – is key.
However, while many people will choose to continue working for financial reasons, others will simply relish the chance to stay active and involved in a working environment. Being able to enjoy retirement is still a key wish for a lot of people too, and happily it seems that many are still overwhelmingly positive about their golden years – 48% of those surveyed most associate the word 'leisure' with retirement, closely followed by 'freedom' (47%), 'enjoyment' (34%) and 'opportunity' (23%).
Ultimately, for many people, it seems that retirement no longer signifies the end of working life. Instead, it marks the beginning of a more flexible working arrangement, and being able to balance that with the leisure and activities they're hoping to enjoy can offer the best of both worlds.
The Budget reforms announced earlier this year will only add to the possibilities, as David Macmillan, managing director at Aegon UK, commented: "The Government's decision to provide greater pensions flexibility sits well with the plans of many workers who see retirement not as the day they stop working, but the point at which they scale back their hours.
"Many of these people are likely to start drawing some income from their pension in order to supplement their part-time earnings. The fact the Government is also allowing people to continue making pension contributions of up to £10,000 each year, whilst taking a pension, means people can continue to top up their pension pot whilst drawing an income."
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