BLOG: Retirement is no time to down tools 

Written by: Angela Seymour Jackson, managing director of workplace pensions, Aegon UK
Retirement, the period once regarded as the stage of life to sit back and enjoy the fruits of your labour and hard graft, is not what it used to be. 

Over 17m workers across the UK are set to work on past their retirement age because they haven’t saved enough to provide the lifestyle they had hoped for. Of course there are numerous reasons why people want to remain in work. Many want to keep mentally and physically active; others simply want to keep busy, enjoy the social aspect of work and retain a sense of purpose.

Despite this, the stark reality for many is they simply won’t have a choice and will be forced to keep working to help supplement their retirement income. On average, people currently in work across the UK expect to retire at 63, but with 93% of people falling behind on their savings objectives, nine in ten will be facing a shortfall when they reach retirement. This is one of the main reasons why retirement is, by many, seen as a gradual process, slowly winding down rather than crossing the finishing line and never looking back.

One of the main reasons for this is that people in the UK are living longer and longer. Over the next 20 years it is projected that average life expectancy will reach 88, and this means that people will need to rely on their hard-earned savings for at least 20 or 30 years.

To stop people being forced to work to plug their savings gap, and instead have the freedom to make a decision about when to stop working, the UK Government launched workplace auto-enrolment. The scheme was introduced three years ago to help people save money on a regular basis, automatically putting people into a pension unless they opt out. There are now over five million employees enrolled into a workplace pension scheme and it is helping to get more people saving for retirement.

However, with so many people failing to save enough and a quarter worried they won’t be able to retire at their target age, what should those with a shortfall do? Our own research has found that the majority, three fifths, expect to continue working in their current role until they feel they have saved enough. A quarter expect their employer to create a flexible or part-time role and one in ten think they will become self-employed.

Employers can do more to support older workers and be flexible, but we can’t expect them to do it all on their own. We, as workers, can carry out our own retirement savings health check, so we know where we stand and the options that might be available to us in the future. If you want to make the most of working in later life now is the time to plan.

Assess how you are doing right now, check the size of your current pension pot and review the level of your contributions. This will help you work out realistically what your annual income might be. There are many services out there to help you do this, Aegon has an online tool called Your Retirement Planner which lets you clearly review your retirement income options.

Once you know this, you are in good stead to speak with your employer about the options that might be available for you. Discuss the monthly contributions from your salary, think carefully about whether these can be increased and also have a chat about what the options might be when you do start thinking about slowing down or looking to work part-time.

It may be that, as this workplace trend grows, we see more flexible financial products for those working on through later life.

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