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The generation that won’t retire
By the time we hit state retirement age, many of us hope we’ll be able to retire in comfort, and picture ourselves taking a series of sun-soaked holidays. Others, though, see it as an opportunity for a fresh start: a new hobby, new studies or even a new business.
Planning to work past retirement?
The default retirement age ended in 2011, so that you don’t have to stop working unless you want to. A survey in late 2012 found that 6.5 million over-50s are planning to work past state retirement age – that’s an increase of 43 per cent since 2010.
More than a third – 36 per cent – said they would stay in work because they enjoy it. And they may be making a sensible choice; there are studies that prove there are health benefits to working longer.
According to the Institute of Economic Affairs and the Age Endeavour Fellowship, doubling the number of years spent in retirement increases the probability of a range of potential problems, including suffering from clinical depression, having physical conditions diagnosed, and taking a drug for such ailments. Further to this, a study by INSERM, the French government’s health research agency, found that for every additional year of work the risk of getting dementia is reduced by 3.2 per cent.
over-50s are planning to work past state retirement age
However, there are economic considerations for many: the majority of those in the retirement survey (52 per cent) will continue to work because they can’t afford to retire.Pension funds have been damaged by a volatile stock market
And it’s hardly surprising. Pension funds have been damaged by a volatile stock market since the onset of the economic downturn in 2008, while annuity rates (the regular income paid out to a pension holder) can be paltry. A 65-year-old non-smoking man living in north-east London with a £100,000 pension fund can expect just under £6,000 a year, based on figures given by two pension providers to The Guardian newspaper in summer 2013.
Then there’s inflation: bad news for anyone hoping to retire because it eats into their savings, weakening the interest they can earn on the money in the bank and reducing the spending power of each pound in their pocket.
So if you’re approaching retirement and don’t think your finances will be sufficient to retire on for at least another decade, what can you do to give them a boost?
What’s in the pot?
First things first: find out exactly what you already have in your pension pot, taking into account all of your pension funds. If you’ve moved jobs a lot, you could have a separate pension from each one. If you think you may have lost any, you can track them down by contacting the government’s Pension Tracing Service or by calling 0345 6002 537 (a charge could apply).Work out when you may be able to retire and still afford the quality of life you want
Once you have located all your funds, get statements from each provider and projections for their future value. This will help you work out when you may be able to retire and still afford the quality of life you want. There will be a number of options available in terms of managing your money, so it’s essential to get independent financial advice at this stage.
If you are looking to top up your retirement fund – or to fund a small business, or even that dream holiday – one option may be to look at downsizing your home.
- A smaller property that is easier to care for and to lock up and leave if you travel
- Downsizing provides the opportunity for a major clear-out of possessions that have built up over the decades, including treasured artefacts belonging to your adult children!
- Many of those who have moved to smaller properties have reported a psychological boost brought on by the simplification of their living arrangements
Keep on keeping on
To afford a comfortable lifestyle as you get older, you may decide to make the most of earning a living – either by taking a job or going it alone and being your own boss. Indeed, in early 2013, the number of people aged 65-plus in work topped one million for the first time, suggesting it’s an increasingly popular option.
Janice McGrellis, 67, from Brighton, has been topping up her pension by working as a legal secretary for the past four years after spending the majority of her career working for a hotel company. "I worked for the company for 25 years but it went bust and it swallowed up my pension and all the shares I had built up," she explains.
But while Janice admits she has to work to pay the bills, she says: "I don’t think I’d stop even if I didn’t need it – though I might go part-time next year if I can afford to. The only way I’d stop altogether would be if I could afford to give up paid work and do voluntary work instead – there’s no point just sitting at home watching TV all day."
People aged 65-plus in work in 2013
Almost 1 in 10
people in this age group are now employed
Skills older workers
bring to the workplace
Many older workers bring extra skills to the workplace. Many companies now have special policies in place to encourage the employment of older workers. Customer satisfaction is markedly higher in outlets with older employees for one restaurant chain. They also connect better with customers, show willingness to ‘go the extra mile’, and act as mentors, helping younger colleagues, according to research by Lancaster University Management School.Many companies now have special policies in place to encourage the employment of older workers
One employer of older workers said: ‘To simply throw away all the experience and skills that an older worker brings to the workplace just because they have reached a certain age has always been a strange notion to me, which makes no business sense whatsoever.’
Get up to date with computers
- Get over any reservations – computers are more accessible than ever
- Start with the basics – if you haven’t used a computer in a while, get used to finding your way around a keyboard and controlling a mouse
- Go online – master the basics of email (including sending attachments) and web browsing
- Find a course – classes aimed at beginners are widely available, often funded by local authorities
- Tackle the common programs – familiarise yourself with Microsoft Word, Excel and PowerPoint
Self-employment: a popular choice
In fact, figures by the Office for National Statistics show that the number of self-employed people rose by 367,000 between 2008 and 2012 – with 84 per cent of the rise being made up by people over 50 working for themselves."Retirement is so 20th century"
Kim Stopher, from Bedfordshire, is one of them. And he says that at the age of 63, he’s had the most lucrative week of his working life – billing £1,900. Kim started working for himself gradually by starting part-time as an assessor, interviewing candidates at the end of training courses. "As the course was relevant to my working life, I was glad of the opportunity," he says. "It gave me two or three assignments each month, each typically for two days." He has also started working as an independent technical consultant in his field of expertise – the steam boiler industry – and taken on delivering training courses.
But Kim knows his income won’t always be like that, especially when he goes on holiday, when he won’t get paid at all. "Self-employment does have its pitfalls, and there are expenses such as insurance and accountancy fees to worry about," he says. "But a few months ago I met a pensions adviser and by re-scheduling my planned retirement age to 75, I was amazed by how much better off I would be, and that I could indeed then afford to retire – not that I will necessarily want to. Retirement is so 20th Century," Kim says.
And he’s not alone. Fifteen per cent of all new businesses in England and Wales are started by people aged over 50, according to recent figures; and older entrepreneurs are responsible for 50 per cent more start-ups than they were 10 years ago. There’s another advantage: companies they start have a 70 per cent chance of surviving the first five years.
Increase in self-employed
between 2008 and 2012
15 per cent
of all new businesses in England and Wales are started by over-50s
Want to start your own business?
According to The Sunday Times, popular choices for post-retirement start-ups include floristry, gardening, tuition/coaching services, running a B&B, and trading/auction websites such as eBay.Whatever your idea, there’s plenty of help around
But whatever your idea, there’s plenty of help around. The Prince’s Trust is well known for helping young people start their own initiatives, but less well known is its sister organisation, Prime, the Prince’s Initiative for Mature Enterprise, which supports business creation by the over-50s.
There is useful information online from GOV.UK, including help from four enterprise networks:
- England - National Enterprise Network
- Scotland - Business Gateway
- Northern Ireland - NI Business Info
- Wales - Business Wales
Don’t forget that whether or not you launch your own business, if you do earn money in retirement that is greater than your tax-free allowance, you will need to pay tax on it.
Pension Tracing Service
Find a lost pension
The Money Advice Service
Work out how much extra you need to save to plug any pension shortfall
GOV.UK – benefits adviser
Check what support you can access
Money Saving Expert – Budget Brain
Track your income and outgoings
Brush up on your skillset
The views expressed here are solely those of the author,
and do not necessarily reflect the views of M&S Bank.
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