Almost two million people face the reality of changing their retirement plans less than 10-15 years before they aim to stop working, according to Retirement Advantage. (Hover text: By clicking on one of these links you are departing from the regulatory site of Keith Roseburgh Financial. Neither Keith Roseburgh Financial nor Intrinsic is responsible for the accuracy of the information contained within the linked site.)
Changes to the State Pension Age will mean that up to 1.8 million over-50s could be forced to work an extra three years if they don’t make swift changes to their retirement plans. Are you, or is someone you know among them? Read on for your next steps.
What is happening to the State Pension Age?
It’s being pushed back. So far, the age at which women start to receive their State Pension has been increased from 60 to 65, to bring it in line with the men’s age. From 2019, the age will rise again, for both sexes, to 66. Further changes will mean that, by 2028, the State Pension Age for some people will be 67. Further increases are due between 2044 and 2046, which will push the State Pension Age back to 68.
The exact age that you will be able to claim your State Pension will depend on when you were born, for more information on this, click here.
What effect has this had so far?
According to the research:
- Almost two thirds (61%) of people over the age of 50 will now work for one-to-five years longer than they had originally planned
- 23% of over-50s will now work for up to 10 years longer
- The changes are affecting more women than men, with 35% of women changing their retirement plans, compared to just 21% of men
What can you do if you are one of them?
If the changes to the State Pension Age have affected your retirement plans, there are several things you can do to try to reduce the amount of time you will need to continue working. In order, they are:
1. Re-evaluating your retirement plans
Don’t panic and assume that you will need to work for longer just because the State Pension Age is increasing. If you already have plans in place to retire early, or to use your own savings and investments as income when you leave work, you may be able to continue with that route after making a few adjustments.
2. Identify what you already have available to you
Calculate how much you will have when you reach your ideal retirement age, accounting for your savings, investments, personal pensions and workplace pension. For help with this, you can use a pension income calculator, or talk to a financial planner or adviser.
3. Work out how much you will need
While you may only need to support yourself for an extra year, you may be within a group with a much longer gap. It is important to be sure that taking that extra money at the start of your retirement won’t affect your ability to afford care and accommodation in later life.
4. Identify any shortfall
If there is a difference between the retirement income available to you and the amount you need, it is time to start planning how you will fix that. You have three options here:
- Work for longer: Even if it is part-time or as a consultant, continuing your career for longer will give you extra income, without the need to work full-time and sacrifice the activities you had planned.
- Live on less: If you have less money to work with, but you are determined to stop working on your goal date, then it may be necessary to tighten the budget during the first few years of retirement so that the money you do have will last longer.
- Put more away: Alternatively, you could restrict your spending during your working life to ensure that you have enough to live on when you retire. The biggest thing that will help you to achieve this is a Workplace Pension, so making sure that you are enrolled at work is important.
- Take the help on offer: This includes automatic enrolment into a Workplace Pension and the tax relief available on money invested in it.
Talk to us
An independent planner or adviser will be able to help you to see your situation with fresh eyes, putting a new perspective on things and hopefully brightening your outlook. They will also be able to apply their years of financial knowledge and experience to suggest solutions which you may not have thought of, or heard about, previously.
To start discussing your options and to restore your confidence in your retirement plan, please get in touch with us.