Independent Financial Advisers Glasgow News & Guides

Two in five (40%) people planning to retire this year would be happy to work past 65 if they had the chance, according to new research from Prudential.

The main motivation for more than two thirds (68%) of this year’s retirees who want to stay in the workforce past 65, is a desire to remain physically healthy and mentally active, while 39% do not like the idea of retiring and just staying at home. More than half (54%) claim that they enjoy working.

However, despite wanting to stay in work, only 13% would choose to continue to work full-time with their current employer. Nearly half (49%) of those retirees who want to work past 65 years old would prefer to work part-time, either with their current employer or in a new role, in order to strike a better work life balance.

More than one in 10 (11%) of entrepreneurial retirees would consider starting their own business after the age of 65 or earn money from a hobby in order to keep working. Five per cent would work as charity volunteers.

Recent ONS figures show that average retirement ages are rising, with men now retiring at an average age of 64.6, compared with 63.8 in 2004, and women working until 62.3 years compared with 61.2 previously.

The Pensions Policy Institute has published new research which considers the implications for retirement income of Government policies to extend working lives.

The research examines how much longer today’s over 50s in England in 2011 might need to work and save to meet target levels of retirement income.

Commenting on the findings of the research, Niki Cleal, PPI Director, said:

“The research found that the vast majority of the over 50s who are working in 2011 - around 85% - might have sufficient state and private pension income to meet a minimum acceptable standard of living in retirement of £11,000 per annum if they continue to work and save until they are eligible to receive their state pension. However, for many people an income in retirement at this level is unlikely to be considered adequate.”

A smaller proportion of today’s over 50s are likely to be able to have a high enough retirement income to replicate the full standard of living that they enjoyed during their working life.

Niki Cleal said:

“On a positive note, around 40% of today’s over 50s who are still working might have sufficient state and private pension income to have a retirement income that would allow them to replicate their full living standards in working life, if they continue to work and save until they are eligible to receive their state pension.”

“On a less positive note, 5% of today’s over 50s might have to work and save for between six and ten years after State Pension Age and a further 45% would have to work and save for eleven years or more beyond their State Pension Age to replicate their working life living standards in retirement.”

“This demonstrates that many people need to start saving more today, if they want to avoid having to work much longer than they planned and want to have an adequate retirement income in the future.”

More than 10% of people who had planned to retire during 2012 are making alternative arrangements and putting off drawing their pension for the time being, according to the latest results from Prudential’s Class of 2012 research.

Of those deferring their retirement, a third claim they do not want to retire yet, while two thirds say they are putting it off because they can’t afford to retire as originally planned.

However, showing that giving up work before growing too old is still an aspiration for many, the average age of people planning to retire this year is 60 years old – a similar age to last year’s survey and seven months younger than in 2010.

Vince Smith-Hughes, Prudential’s retirement income expert, said: “One thing this year’s retirees have in common is actively making choices about when and how they will retire. Although many people think the idea of retiring as early as 60 is out-dated, the majority of this year’s retirees are defiantly sticking to that plan. It’s likely that many of these people will have accumulated benefits in final salary pension schemes that generate an acceptable income in retirement – perhaps signalling that the golden era of retirement for baby boomers isn’t over yet.

“It is, however, undeniable that there is a new retirement reality for a significant number of retirees. People are living longer, and for many, the very real prospect of a thirty year retirement is either unpalatable or unaffordable, hence the decision by many to continue to work. Retirement is also becoming a more opaque concept, with many people working part-time, either out of necessity or desire.

“To stand the best chance of having a comfortable retirement, which starts when you want it to, it’s important to seek professional financial advice on saving for a pension and on what post-work income options are available. Saving as much as you can as early as you can will help you to gain more control over your retirement."

New statistics published by the Office for National Statistics reveal that that people are working longer than they used to. The average age at which people leave the labour market – a proxy for average age of retirement – rose from 63.8 years to 64.6 years for men and from 61.2 years to 62.3 years for women between 2004 and 2010.

This average summarises information about the ages at which people stop working, which differ for different people. For men, the peak ages for leaving the labour market are 64 to 66 years. For women, the peak ages are 59 to 62 years. Thus, retirement peaks around State Pension Age (SPA) for both sexes; but many people retire before SPA, and others work beyond SPA.

In 2010, there were 3.2 people of working age supporting each person of SPA and over in the UK. Without any changes to SPA, this ‘old age support ratio’ would drop to 2.0 by 2051, but under current legislation SPA has already begun to increase for women, and SPA for both sexes will rise to 68 by 2046. When these SPA changes are taken into account, the old age support ratio is projected to fall less, to 2.9 by 2051.

Women’s life expectancy at SPA will decline over this decade as their SPA rises. Between 2021 and 2051 life expectancy at SPA is expected to rise gradually for both sexes, because, following a change in the assumptions for future life expectancy in ONS's 2010-based population projections, life expectancy at the relevant ages is now projected to increase at a slightly faster rate than the increases in SPA contained in the Pensions Acts 2007 and 2011.

There are inequalities in life expectancy between social classes. The latest estimates for England and Wales show a gap of over three years in life expectancy at age 65 between the highest and lowest classes in the National Statistics Socio-economic Classification (NS-SEC). Within the UK, life expectancy at age 65 is highest in England and lowest in Scotland.

New research among 45-65-year-olds by Standard Life reveals having children living in your household can have a big impact on your retirement decisions. Almost half of respondents (49%) with two children in the household have no financial plans to provide for the future, compared to just over a third (35%) without children.

According to the International Longevity Centre-UK (ILC-UK), it is too often assumed that retirement is a one-off event, rather than a process. Yet there is increasing evidence that we are moving towards a process of ‘gradual retirement’, a concept associated with a wide range of opportunities that may be available to older workers, including downshifting within their current employment, moving into new forms of flexible and part-time work, and self-employment.