Do you want to work in retirement?
Retirement is seen as the time when people stop working and enjoy free time, perhaps to be with family or pursue hobbies. Actually, though, not everyone does stop working. Some remain in their job because they want to, but others have no choice because they cannot afford to stop working.
According to YouGov's Understanding Pensions and Retirement 2014 report, 42% of people expect to continue working after retirement, in either part-time or full-time roles. Almost a quarter say they will have to work to make ends meet, but more than half of people earning over £70,000 plan to keep working, as do a similar amount of people with a pension. This suggests that a lot of people intend to keep working but do not have to.
A consistent finding from the report was that having an idea of the level of outgoings you will have in retirement will help you be prepared for it. Only 13% of people who did not have a good idea how much they would need to live on in retirement were confident they would have enough.
The question everyone needs to ask is whether they intend to stop working and, if they do, what they would like to do when they give up work. The top three things people look forward to in retirement are travelling, spending time with family and having time to relax, with hobbies and socialising also being popular choices. Others would prefer to keep working, and nearly a quarter of respondents thought that leaving work would feel like they had lost their sense of purpose.
Choosing to remain in work is right for many, but if you have things you want to do in retirement, don't risk missing out on them by failing to plan properly.
The easiest way to get started with planning for retirement is with a pension, as employer contributions and tax relief mean you receive free money that you wouldn't get by saving into another platform. If you are a basic-rate taxpayer, the 20% tax usually deducted from your pay is added to the pension - so if you pay in £800, the government adds another £200 to bump the contribution to £1,000. Employer contributions often match those of the employee, so it would be another £1,000 added to the pension. This would give you £2,000 for every £800 you paid in.
YouGov's report shows that over half of people without a pension don't think they will have enough money to live on in retirement, whereas 45% of people with a company pension and 32% of people with a personal pension are confident they will. Planning for the future increases the chances of having a desirable retirement.
If you have a pension and want to check on its performance, a pension review is essential. This will look at how well the fund has grown, how much is being paid in fees, where the money is invested and whether it's on track to provide the retirement you are hoping for. Having a regular pension review will mean you are never in the dark about your fund's performance, allowing you to plan appropriately.
Are you looking forward to retirement, or do you plan to keep working? Let us know with a comment below.
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The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section: https://www.portafina.co.uk/whats-new
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