Who wants to work forever? There are some, often passionate, driven people who live to work. For many others, having more time, travelling and exploring fresh leisure opportunities is what the future is all about.
Achieving any retirement goal requires planning. It doesn’t just happen. Unless you are fortunate to have a sizeable pension in place, or have received inheritance monies, when you finish work your income is likely to drop considerably.
That’s not meant to cause panic. It is the reality for many people who have worked hard all their life.
The state pension age is set to keep rising, and it will always be only a modest income to cover basics and act as a safety net.
The ageing UK population
Throw other things into the mix, such as people living longer, and it’s apparent that we will need to either work longer or start saving and investing towards our future income requirements much, much sooner.
Let’s look at some numbers highlighted by Aviva last year.
It’s common knowledge that we are all living longer. Medical advances and healthier lifestyles mean that anyone retiring at 65 years of age can reasonably expect to live into their mid-80s and beyond.
Put simply that means a steady income is needed for 20-plus years when you retire. Are you in a position to enjoy those later years without worrying about money?
Some people complete cash flows, budget and take advice about regular savings. Many more carry on working and put longer-term wealth planning to one side.
Working longer is a requirement rather than a choice for some.
Figures from the Office for National Statistics (ONS) show that a record 10.1 million people over-50 now stay in work. Incredibly, 1.2m of these workers are already aged over 65 years.
Ten years ago, the figure for over-65s was less than 700,000 still working. Going back another decade, to 1998, and the total was around 434,000 people from that elderly age range.
Why are people working longer?
Some government statistics are also fascinating. Data charting the average age of exit from the labour market shows that both men and women are staying in work longer. Since 1997, for example, people are now staying in work at least two years longer than they did twenty years ago.
One reason highlighted by Aviva is both heart-warming and a little sad. Around one fifth of over-50s are still working because they are offering financial assistance to their children or elderly relatives.
School and university fees have risen in recent years. Many children are living at home longer – often without being able to make monetary contributions to the household.
At the other end of the age spectrum, parents and other dependent relatives have needed care services of one kind or another. That all costs money.
This all shows that people care about each other. However, it puts a strain on people’s ability to save and plan for retirement.
Many think that there will come a point when they can finally divert all of their spare income into investments so that they too can consider stopping work.
The worry is when it comes to planning for retirement in older age, people underestimate what income they will need and may not be properly prepared for the years ahead.
Retiring early still appeals to many people. To make it a reality, and to make sure you are in a good position to fulfil retirement dreams as early as possible, monitoring pension arrangements, investments, savings and cash flow planning should be an ongoing process.
Wealth planning brings peace of mind
With the Internet offering so much wide-ranging financial advice and offers these days, it’s sometimes hard to build a clear picture of what meets your requirements.
Asking yourself some of the following questions will help:
- Do I want to retire earlier than the state pension age?
- When exactly do I want to retire?
- How much money will I need to fund my lifestyle during retirement?
- What income will I have in the future, and how much savings will I have in place?
- Are my plans on track to enjoy a comfortable retirement?
If you’d like some help going through these considerations, we’re here to help.
The importance of professional and independent financial advice that is tailored to your specific circumstances has never been more topical. It can be the difference between enjoying a comfortable retirement, or needing to work longer into the future.
Call the Logic Wealth Planning team if you need further information about pensions, retirement and cash-flow planning.
You can start the conversation with a quick call now: 0808 1234 321
Alternatively, send us and email and we’ll get back to you when it’s convenient: email@example.com