Those approaching retirement age are shunning the traditional route when it comes to giving up work. For most people, the thought of handing in their notice and giving up their career in one fell swoop is no longer appealing. Today, retirees are choosing to retire later and go about it far differently than previous generations.
The latest figures from the Office of National Statistics, show the number of people aged over 50 and still working has reached record highs. Over ten million people are continuing to work into their 50s and beyond, leading to older generations now representing almost one in three (31%) of all workers. In 1992 when records first began, the statistic was one in five. It represents a significant shift in retirement attitudes and lifestyles.
Alistair McQueen, Head of Savings and Retirement at Aviva, said: “We’ve never seen a population of this age and size in work. They are record breakers. 10.6 million people is more than the populations of Scotland, Wales and Northern Ireland combined. And as the State Pension age for men and women is now rising, we can expect this population to keep growing.”
While the State Pension age, and retirement provisions in general, play a role in the growing number of over 50s remaining in work, attitudes have changed considerably too.
Half of over 50s have dismissed the traditional retirement journey, instead favouring a phased approach, according to research from Aegon. In fact, just 31% of workers over the age of 50 were looking forward to the traditional approach to retirement. Rather than the usual ‘cliff edge’, workers today are more likely to want to blend employment with more free time through a variety of ways:
- Working fewer days (70%)
- Reducing daily hours (44%)
- Flexible working arrangements (33%)
- Greater holiday entitlements (20%)
While money may be a motivator for some, the research suggests that working for longer is about far more than securing a salary.
Longer life expectancy and improved health
Even with the State Pension age rising, improving life expectancy means we’re likely to spend longer in retirement than previous generations. As a result, a phased approach may be more appealing. If you like to keep active and enjoy your career, the thought of taking it easy for the next 30 years may simply not be attractive. On top of longer lives, medical advancements mean we’re often far healthier in our later years compared to a few decades ago, making working for longer more feasible.
Changing lifestyles and aspirations
Linking to the above, improved health means retirement attitudes are changing. While in the past being in your 60s may have been associated with relaxing and winding down, people approaching traditional retirement age today often find they still want to explore opportunities, from work to travel. Retirement is now seen as a time to enjoy extra free time and tick off aspirations.
For some, this may include continuing to progress in their career or developing new skills in the workplace. It’s also important to recognise the social aspect of working too. As an environment where you spend much of the day, work can be essential to your social life, something you may miss when you decide to fully retire.
Greater options for flexible working
Today, it seems like there are endless possibilities for working flexibly; from being employed and working remotely to launching a business from your own living room.
If you cast your mind back to just ten years ago, there were far less flexible working opportunities. However, businesses are now embracing digital technology that allows them to adopt a more agile workforce. If you want to carry on working in some form, but benefit from more free time retirement can offer, it’s now easier than ever to find a working pattern that suits you.
It’s also worth noting that all employees have the right to request flexible working if they’ve been with the same employer for at least 26 weeks. A request may include working fewer days or flexitime, where you choose when to start and end work around core hours.
Pension income adaptability
Retirement income may not be your top reason for choosing to carry on working, but it’s an area to consider. Many retirees in the past would have used their pension savings to purchase an Annuity, creating a defined guaranteed income for life. This often meant a phased approach didn’t align with the finances. However, since the introduction of Pension Freedoms and the ability to change pension income as and when it suits you, it may be more practical.
If you’re planning your retirement, whether you favour the traditional path or a phased approach, we’re here to offer you support. Our goal is to align your aspiration with your retirement provisions, helping you get the most out of the next stage of your life.
Please note: Pension drawdown products remain invested and the fund value (and any income from them) may fluctuate and can go down, which would have an impact on the level of pension benefits available. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.