The days of counting down to your 65th birthday so you can leave the world of work forever are rapidly disappearing. Not only is the Government gradually increasing the state pension age, but many people are finding that they need to continue working for financial reasons – will you be one of them?
According to latest figures from the Office for National Statistics (ONS), there are now 96,000 more people working past the age of 65 than there were a year ago. A key reason for that could well be that a lot simply can't afford to give up work outright, particularly with budgets being squeezed, and if they haven't built up a suitable pension they could easily want a few more years to add to it.
Of course, there could well be a lot of people that want to keep working for personal reasons, perhaps to help them stay active or social or simply because they love their job. But it's still a big increase, and when combined with regular reports over the lack of retirement saving – latest figures from Scottish Widows, for example, revealed that just 53% of people are saving adequately for retirement, meaning 47% aren't – it would suggest that a lot of it comes down to financial factors.
Steve Lowe, director at retirement income specialist Just Retirement, commented on the ONS figures: "It took more than 10 years for the number of people working past the age of 65 to double from 500,000 to a million, [and] at the current rate it will only take six more years for that figure to reach 2 million.
"One in every 10 people aged 65 or over is working, some by choice but many because of financial necessity. The combination of longer retirements and inadequate pensions is forcing many to continue working past State Pension age."
So, will you be one of them? Hopefully not, at least not because of financial reasons, and that's why it's important to start preparing as early as possible.
"Auto-enrolment should encourage higher levels of pension saving over the very long-term," added Mr Lowe, "but in the meantime we have a generation of retiring workers that need all the help they can get to make the most of the money they have saved." This is even more important given the pension changes announced in the Budget, which will give retirees more freedom in how they can take their money, and means seeking suitable guidance is more important than ever.
Hopefully the guidance guarantee, another revelation in the Budget, will help those approaching retirement make the right decision. Not only should it help consumers decide the best way to maximise their retirement income, either through the money they've already got or the money they could get – figures from Just Retirement have revealed that as many as half of all older homeowners aren't claiming all the state benefits they're entitled to, meaning they're missing out on an average of £687 per year, and £3,244 in the worst-case scenario – but it'll help them decide if they really need to continue working.
However, additional research has shown that for that guidance to be truly effective, it should be wholly impartial. A survey from LV= has revealed that 78% of over-55s support the Government's promise of free guidance prior to retirement, but just 19% would act on that guidance if it was offered by their pension provider. This is in comparison to the 48% who would act on advice given by an independent consumer body, with 52% happily attending a guidance session provided by them.
"The findings of this research support the widely held view that, for the guidance to be a success, those approaching retirement need to have trust in the process and the organisation offering the service. It is clear that, in order for this to be achieved, the sessions should be provided by an independent body," said Richard Rowney of LV= Life and Pensions.
The figures also revealed that just 9% would be unlikely to seek regulated financial advice if it was recommended in their guidance session, showing that consumers are becoming increasingly aware of the value of expert financial advice – and really, it could make all the difference to your retirement aspirations. If you're approaching state pension age and need advice before the guidance promise is met, make sure to consult the experts to see how you can maximise your income – and hopefully you won't need to stay in work to be financially secure. Unless you want to, of course.
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