Pension: Expert gives advice on preparing for retirement
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The number of older workers has grown in recent years, but not everyone carries on working because they want to. The increase in state pension age from 65 to 66 brought 55,000 more 65-year-olds into the employment market, according to The Institute of Fiscal Studies.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, commented on the changing landscape of employment for older people.
She said: “The trend of people working longer is undeniable and is becoming a fact of life. Workers aged over 50 account for around one third of the current UK workforce and there are currently around 1.3 million people over the age of 65 still in work.”
The increase in older workers is believed to be caused by a variety of factors. Some of these are positive, others not so much.
Ms Morrissey explained: “Many people continue to work because they want to – they aren’t ready to retire yet and feel they still have more to give. The default retirement age was scrapped so employers can’t force workers out of jobs.
“This is a huge positive not only for people’s finances but also their emotional wellbeing – not everyone wants to go from being fully employed one day to retired the next when they aren’t ready for it.”
However, others continue to work simply because they have to.
She continued: “A combination of rising state pension ages and inadequate retirement savings keep them working longer than they want to. Others may feel they have to continue to work even though their health makes it difficult to continue in their current job.
“While many people have been able to work from home or use programmes like Zoom to help them do their job, this isn’t the case for others.
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Ms Morrissey believes the modern workplace needs to evolve to reflect a change towards people staying in employment longer, providing flexibility for British workers.
She said: “In future, auto-enrolment will mean increasing numbers of people hit retirement age with a workplace pension – this will give them more options as to how and when they retire.
“However, we will need to see further evolution in working practices – such as increased use of online working, more flexible hours and more support for older workers finding work if we are to help older workers remain in the workplace.”
Ms Morrissey also provided some tips on how people can prepare for retirement.
“Think about what kind of lifestyle you want in retirement and look at whether your pension is on track to achieve that.
“You can use a pension calculator to see what kind of income your current pension will give you and give you an idea of what you can expect if you increase your contributions.”
Boost your contribution
“It’s tempting to set and forget your pension contributions but getting into the habit of increasing your contributions every time you get a pay increase or move jobs can make a huge difference to how much you end up with at retirement.”
Make the most of employer contributions
“While many employers only contribute the minimum amount to employee’s pensions there are others who are prepared to contribute more if you do.
“Over time this can make an enormous impact on how much you save for retirement so it’s worth checking to see if your employer does this.”
You don’t have to retire on one day
“It can be hard to be fully employed one day and fully retired the next. People often miss their colleagues and get bored at home.
“However, phasing into retirement is becoming more popular. This is where people slowly decrease how many days they work over a period of years. It’s worth checking if your employer will let you do this.”
You don’t have to retire at 65
“The default retirement age was scrapped years ago so employers cannot force you to retire at age 65. Speak to your employer if you wish to work for longer.”
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