How long do you want to work?
According to the labour market statistics for the period of December 2018 to February 2019, employment of those aged 16–64 in the UK is running at 76.1%, the joint highest level ever and up 0.7% on a year ago.
From the numbers we can see the following:
• The increases are being driven by more women aged 50–64 in the workforce. At the start of the decade, 58.5% of women aged 50–64 were in employment, whereas the latest figure is 68.1%. Coincidentally in 2000, that was the male rate of employment in the 50–64 age band.
• The proportion of men aged 50–64 in work has also risen over the same period, but less dramatically – from 71.4% in 2010 to 76.8% now.
• At 65 and beyond, employment is reaching record levels for both men and women; as the graph shows. Women and men aged 65 and over, have an employment rate of 7.9% and 14.2% respectively, compared to 5.5% (women) and 10.8% (men) in January 2010.
It is suggested that there are several reasons for the increase in employment beyond age 50:
• For women – and now men – the increase to the State Pension Age (SPA) has undoubtedly had an impact. As recently as April 2010, the SPA for a woman was 60. By October next year, both men and women will share an SPA of 66 and this will eventually increase to 67 by 2028; at which point the Minimum Pension Age (MPA) – currently 55 – will have increased to 57, maintaining the traditional 10-year gap. Further increases to the SPA will phase in from 2037.
• The ending of compulsory retirement ages has encouraged longer working lives.
• The gradual disappearance of final salary pension schemes, particularly in the private sector, has forced some people to revise their retirement plans.
• Economic conditions have played their part. Real (inflation-adjusted) wage growth has been virtually zero over the last 10 years, limiting the scope for retirement savings.
Some think that working for longer can be beneficial to health, others believe that continuing work-related stress could be life-shortening.
Wouldn’t it be ideal if you could choose when to stop work, rather than have the decision forced upon you? With a financial adviser this is a possibility and there is no substitute for adequate financial planning – preferably well before age 50. This is particularly important if you have clear future goals in mind for your retirement.
As an example, I recently had a case where a client of mine wanted to know when he could retire. Through cashflow modelling, I confirmed that he could retire tomorrow – five years earlier than expected – without compromising his lifestyle. It is a common misconception that people haven’t got enough money to retire on and cashflow planning is a great way to answer this question. This is not the case for everyone and a good financial planner will work with you to review what is the most sensible option for your circumstances.
If you would like some help to understand when you can afford to retire and how much you can spend in retirement, please don’t hesitate to contact me directly at email@example.com.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.