Retirement in the UK is changing rapidly. The days of reaching 65 and bidding farewell to work with a gold carriage clock clutched under your arm are fading away. Retirement is often no longer a milestone one-off event. And while retirement was previously synonymous with finishing work, that’s no longer always the case.
Perhaps you still want to work and earn in some way – just not in the way you have been. Or maybe you want to retire early, perhaps leaving the workforce in your 50s or early 60s to pursue other interests. In this article, we look at some of the factors driving the changing face of retirement and consider ways to help you achieve your plans.
What is driving the change?
This shift is driven by various factors, these include changes to pensions schemes, the impact of the pandemic, a societal shift towards a more flexible work/life balance, and for some people, the ongoing economic uncertainty.
The move away from traditional Defined Benefit pensions, coupled with the introduction of Pensions Freedoms in 2015, has played a crucial role in changing trends in retirement. Individuals now have greater flexibility in accessing their pension benefits, with pension savers able to access benefits from the age of 55, however this will rise to 57 from April 2028.
And of course, the COVID-19 pandemic has brought lasting changes to working patterns and attitudes, accelerating some of trends we saw from Pensions Freedoms. Working from home and flexible work arrangements have allowed individuals to enjoy a greater work/life balance. This has led to some people choosing to reduce their working hours or make a shift to a portfolio career.
How does all this impact retirement planning?
If retirement is no longer a ‘moment-in-time’ event at age 65, then what does this mean for retirement planning? Whether you want to retire early, scale back your working hours or move away from your main career to pursue other interests, the key first step is to speak to your financial adviser.
Start talking to your adviser early about your plans. Your adviser can work through your goals with you, and using cashflow modelling, together you can explore a range of scenarios based on your current and projected financial situation. You adviser will consider factors such as:
- Your current financial circumstances
- Your spending patterns and outstanding debts
- How much you’re saving
- Projected investment performance
- The impact of inflation
- Your target retirement date and plans for the future.
The benefit of cashflow modelling is you’ll have useful insight into your future finances, helping you to understand if your financial goals and plans are achievable or whether your might need to make some changes to your savings, investments, or spending.
Ready to review your plans?
Please arrange a review meeting with your financial adviser, we’ll be delighted to help.
The value of your investments can go down as well as up, so you could get back less than you invested. Past performance is not a reliable indicator of future performance.
The Financial Conduct Authority do not regulate tax planning.
The information contained within this article is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.
