Today, around 30% of British workers expect to work into their 70s. That’s more than twice the number of people who thought so in 2010.
It’s not surprising many people hold this attitude. The government keeps pushing the state retirement age back, after all.
Currently, if you are a man born before 6 December 1953 the state pension age is 65. By 2028, however, many of us (men and women) will be drawing on our state pensions at the age of 68.
This may or may not be a concern to you, depending on your outlook and retirement goals. After all, many of us are happy with the thought of working into our 70s.
However, if you plan to work into later life, you need to have a well thought out plan.
Consider, for instance, that many of those expecting to retire after 70 are not in the best shape. Over a quarter of them are highly stressed, and a third are in bad health.
What will you do, therefore, if your earnings are lowered or eliminated due to tiredness or poor health? It pays to have a robust retirement plan, which caters to different possible outcomes.
Working Longer: A Deeper Look
It used to be the case that your employer could force you to retire at 65.
However, in 2011 the law was changed and that is no longer the case – unless your employer deems you unable to perform crucial tasks (e.g. physical tasks in a physical job).
If you choose to keep working beyond the state pension age and into your 70s, you no longer have to pay national insurance. You may be liable to income tax, however.
Certainly, the current trend is showing more over-70s still in work.
For instance, in 2012 about 5.6% of women at retirement age were still working. In 2016 the figure had doubled to 11.3%.
It’s worth stating that there is nothing inherently wrong with wanting to work longer. It can be a nice top up to your income, and keep you busy and active.
You can choose to defer your state pension and private pension(s), if you so choose.
Depending on your situation, this could help you save on tax, take a higher weekly state pension income later, and increase the value of your private pension by keeping it invested for longer.
Just make sure you seek qualified, independent financial advice before you make any big decisions about your retirement income and plans.
So there are plenty of positive things to say about working into your 70s. However, it is also clear that many people are not expecting to retire later out of choice.
Rather, many people feel that this choice is being forced upon them due to a lack of savings.
What To Do If You Want To Retire Early
For some people, working into their 70s is a desirable outcome.
For most of us, however, we want to wind things down in our 60s. For some, retiring early (in your 50s or early 60s, for instance) is the ultimate goal.
If this is your goal, and particularly if you are in your 20s and 30s, you should speak to a financial adviser about how your plan specifically should work.
However, here are some ideas to think about before you have that conversation:
- Max out on your employer’s pension scheme. For instance, if you are a teacher then you have access to one of the best defined contribution schemes available.
- Make a solid investment plan. Do you have a large sum of money just sitting in your bank account? Consider investing it in a set of funds.
- Optimise your expenses. Are you paying for an Audible account you don’t use, or a phone contract that could be on a much better deal?
- Consider ways to improve your income. Would a change in career increase your earning potential in the medium to long term? Have you considered an extra job in the short term?
- Consider a personal pension. If you are a basic rate taxpayer, you can put in £800 into a pension and the UK government gives you £200. Just think about it!