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Will you have a pre-tirement?

Will you have a pre-tirement?

Category: Retirement

Updated: 19/12/2014
First Published: 18/12/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

You may dream of the time when you can hang up your work clothes for good, but for many, the days of having a clear-cut retirement date are long gone. Retirement is becoming a process rather than an event, with research from Zopa and Consumer Intelligence finding that a phase of 'pre-tirement' is becoming the norm.

The growth of pre-tirement

The report found that a growing number of people are phasing their retirement, so rather than having a cut-off date, they're changing their working hours to ease gradually into their golden years. The process can take years or even decades – pre-tirement often begins when people are in their 50s and can run well into their 70s, with pre-tirees gradually reducing the hours they work instead of taking an all-or-nothing approach.

The figures show that 49% of respondents believe that 'retirement is now a more fluid process, while 21% didn't or don't want to stop working as soon as they reach 65. There are plenty of different reasons for this, be it financial constraints or simply the desire to stay active, and it's the latter that appears to be the biggest draw.

The study found that 17% of those aged over 65 remained in paid employment while a further 30% did unpaid work, but only a small minority (17%) of those who continued in paid work did so because of financial necessity. Instead, 27% said they worked to keep their mind active, 16% did so to keep busy, and 11% kept working to stay healthy or physically active.

The importance of preparation

However, confusion remains, with 89% of 50-54 year-olds saying they don't know for certain at what age they'll retire, while 35% said they expect to retire later than they originally planned. More than half of 50-64 year-olds believe that changes to the state pension age are making the retirement process more confusing, and 28% said they'll need to retire later as a result.

A particularly worrying finding was that just 24% of those aged 55-64 said they'd be financially secure if they had to retire immediately, while only half of those aged over 65 were confident that they would be, highlighting the importance of making suitable preparations – particularly with retirement age being in a state of flux.

Get your finances sorted

Given that attitudes towards retirement are changing, it makes a lot of sense to ensure that your finances are properly sorted for when the time comes. Making a plan is key – you want to start saving as much as possible from as early as you can, thereby ensuring you're able to build up a suitable pension pot that can be put to good use in retirement.

The increased flexibility in the way people approach retirement means it's important to be just as flexible in how you plan for it. The changes to the pension landscape set to come into force will be a great help, but just make sure you get the right advice to maximise your chances of securing a decent retirement income.

It all comes down to preparation, so whether your pre-tirement lasts for just a few years or a bit longer, you can be sure you've got your finances organised. After all, if everything's in order, you may find you're able to leave work sooner than you think…

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