Being forced to retire early

“I don’t need a plan for retirement, I’m just going to keep on working.”

That’s the extent of a ‘retirement plan’ from a growing number of people, who view the ability to work forever as an alternative to saving for later life.

With longer life expectancy, lower investment returns and a rising cost of living, it’s little surprise the thought of saving enough for retirement can seem daunting.

According to the latest Golden Age of Retirement Report from Aegon, while many of us have a target age at which we would like to retire, nearly two in five of today’s retirees where forced to stop working early.

This was the result of ill health, becoming physically unable to work, or redundancy.

Any of these factors can force an earlier than expected retirement, especially if the plan was to continue working in later life, and have serious consequences for income in retirement.

The findings from Aegon were published at the same time as encouragement from the UK’s Chief Medical Officer, Dame Sally Davies, for individuals to remain in work beyond traditional retirement ages.

Aegon’s research shows that not everyone has the option to continue working in retirement.

The findings also have important implications for the review of state pension ages John Cridland is currently undertaking for the Government.

According to the research, people in the UK hope to retire at an average age of 64.

The pension provider argues that this target retirement age needs to be considered against the backdrop of an increasing state pension age, creating a need to fill the gap between retirement and the receipt of this income.

Retirement has undoubtedly changed in recent years, more often now resulting in a gradual transition between full time work and full time retirement.

In addition to the financial benefits of continuing to work in later life, there are other benefits too.

Remaining socially, physically or mentally active in retirement can all be beneficial for your health.

Steven Cameron, Pensions Director at Aegon said:

“With the concept of a fixed retirement date fast disappearing, people no longer excitedly count down the days until they receive their gold watch or carriage clock.

“Indeed, an increasing number relish the opportunity to stay actively in work. The changing nature of work, attitudes towards retirement and greater pressures on income mean there’s no set pattern to retirement any more.

“The decline of generous final salary pension schemes, and the upswing in pension freedoms, means there is a greater onus on individuals to put enough money aside for retirement.

“Planning is key, and advisers are well placed to make sure those forced out of work earlier, as well as the 12% who retired later than anticipated, can optimise their retirement finances accordingly.”

If you’re thinking about making plans for your retirement, do give us a call. We can help you understand what it will take to secure the life you want in retirement.