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Working beyond 60 = bigger pay rises

Working beyond 60 = bigger pay rises

Category: Retirement

Updated: 01/08/2014
First Published: 01/08/2014

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 It is now over 6 months old so the content may be out of date.

Are you planning on working beyond the age of 60? If so, you could be in for a pay rise. Research from Prudential has revealed that, since 2011, workers over the age of 60 have seen their earnings rise faster than any other age group, with the average pay for over-60s increasing by almost £1,000 in two years.

This 6.1% rise was well ahead of the average increase in earnings across all age groups, which came in at just 3.8%. Working into what was once retirement age is becoming more popular as well, with the number of over-60s in work rising by more than 100,000 between 2011 and 2013.

Analysis would suggest that it's this increase in older workers that's helped to drive up average earnings – particularly when the increase in the number of over-60s occupying managerial positions is taken into account. In 2013 there were 32,000 more managers aged over-60 compared with 2011, an increase of 25.6%. This has combined to make the average annual income of full-time older workers reach £25,200 – a clear increase from the annual salary of £24,000 recorded in 2011.

Stan Russell, retirement income expert at Prudential, commented: "Our analysis suggests that the relative success of older workers in the labour market is down to a combination of their increasing willingness to work on rather than retire, and the recognition by employers of the unique experience and skills they bring to the workplace. Many older people are happy to stay in work for longer and they are now seeing the welcome side-effect of significant year-on-year increases in annual earnings."

So, will you be one of them? It could be a great decision from a financial perspective, but a lot of older workers decide to stay on for the social aspect, too. However, there are still those who would prefer to give up work but have had to delay their retirement because of insufficient pension savings, so despite the prospect of increased pay it may not be a particularly happy decision.

"It is important to remember, therefore, that the money earned in the later years of a career may be too little too late, despite the pay rises for the over-60s that we have identified," added Mr Russell. "The best way to secure a comfortable retirement income is to save as much as possible as early as possible, and take the advice of a retirement specialist or financial adviser."

Whether you want to work into your sixties or not, the message is the same – you need to make sure you've got sufficient savings to see you through retirement, and you'll want to start building up that pot as soon as possible.

Paying into a workplace pension scheme should always be your first port of call – failing to do so effectively means you're missing out on free cash from your employer, not to mention the added benefit of tax relief – but don't overlook additional possibilities.

ISAs, stocks and shares, or alternative forms of investment could all be options, and with new pensions flexibility being announced in this year's Budget, you'll have more choice than ever. So, make sure you fully consider all the options to secure the best retirement income possible, and then you can continue to work by choice rather than from necessity.

What next?

Compare ISAs to find the best deal

Speak to an annuity specialist to consider your options

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.