Are you thinking of changing your retirement plans?
Posted on 13th July 2021 at 09:02
One in 8 people aged 50 and over have changed their retirement plans because of the pandemic.
According to research from the Office of National Statistics (ONS), 5% will retire earlier and 8% will retire later.
Looking at how older people in the workforce had been affected by the pandemic, the research found that many people had started to reconsider their retirement plans.
Why are people reviewing their retirement?
Whether planning to retire earlier or later, in many cases the reason is the same: there isn’t another choice.
Figures show that people over 50 have been seriously financially affected during the pandemic. As a result, some need to work for longer to make up for the income they have lost.
Other than the 16 to 24 year age group, more older workers were furloughed than other age groups. Up to one in four have been working fewer hours and for others furlough payments didn’t top-up their income. Some had to reduce their pension contributions or stop them altogether. Some over the age of 55 needed to use their pension funds to keep going.
Many older people found that they had to stop working earlier than they had planned. During the pandemic to date, the employment rate for people aged 50 and over fell from 73% to 71%, and for those older than 65 it fell from 12% to 10%. A third of older people thought that when their furlough ended there was an even chance that they would lose their job. Some will retire early simply because they can’t find another job.
Reasons to be cheerful
Of the older people who were able to work from home during the pandemic, more than one in 10 now plan to work for longer. In some cases, they have discovered that a more flexible approach to work will allow them to extend their working life.
Now is a good time to review your pension finances. If you have pension savings invested in stocks and shares you will have seen their value fall last year, but you could find that they are now starting to recover. If you have multiple pensions from different jobs, it’s worth finding out if there would be benefits if you combined them.
You can use the online pension calculator to check your overall entitlement and there’s free advice available from the Pensions Advisory Service.
You can also ask your employer about your workplace pension. If you haven’t made an active choice and you don’t know where your pension is, you will probably find that it is in your employer’s default fund. You can ask for a copy of the default fund’s factsheet, which will show you its charges and how the investments have performed compared to other similar funds.
Things to think about
It’s worth planning a time each year to review your pension because things can change. You might have more flexibility than you realise to access some money or to retire sooner than you expected.
If you are making changes to your financial arrangements, remember to check your Will to make sure it is up to date and to let your attorneys know if you have lasting powers of attorney in place.
I’ll be happy to give you some advice, so please get in touch.
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