The changing shape of retirement and the pension’s landscape
Retirement is traditionally associated with the date we give up paid for work, but increasingly people are opting for a phased retirement whereby they reduce the number of hours they work or move to part time contracts in their final years in the workplace.
Research undertaken by Aegon UK plc has found that just 29% of workers believe that they will move straight from full time employment to retirement. These changes have been complemented by the Chancellor’s announcement at lasts year’s Budget which allows people to start accessing their pension from age 55. Once these changes come into effect in April, it is increasingly likely that many people will start to draw some income from their savings before they fully retire.
Hoskin Financial Planning welcomes the greater flexibility brought about by the reforms and believes it is only right that people should be able to spend their savings as they see fit.
However, the average 50-70 year old is much healthier than previous generations. Life expectancy has been increasing at 2.5 years per decade, a far greater rate than many expected. Looking at life expectancy, on average people can expect to live 20.5 years from age 65. Given wide variations hidden by averages it is quite possible that a substantial number could live to see their 100th birthday.
Of course, increased life expectancy is good news but we urge those people who will be able to take advantage of this year’s reforms to put in place a plan for their retirement income, so that they avoid outliving their savings across what could be a very long retirement.
It’s not just a matter of personal responsibility as the pensions industry and financial advisers must support those approaching retirement and guide them through these new changes.
As pension specialists, in the past our focus has traditionally been on supporting customers to accumulate their savings up to retirement. Now however, the income phase will be just as important for us. Our advice service may be necessary for those looking at drawing an income across many decades. The income requirements of someone still in part time work in their 60s for example are likely to be quite different from the requirements of an active 70 year old who has given up work completely.
Hoskin Financial Planning will be ready for the changes when they come into force in April 2015.
For more help and advice please do not hesitate to contact us @HoskinFinancial
THIS BLOG PROVIDES INFORMATION, IT IS NOT ADVICE. ANY OPINIONS ARE GIVEN IN GOOD FAITH AND MAY BE SUBJECT TO CHANGE WITHOUT NOTICE. OPINIONS AND INFORMATION INCLUDED WITHIN THIS EMAIL DO NOT CONSTITUTE ADVICE. (IF YOU REQUIRE PERSONAL ADVICE BASED ON YOUR CIRCUMSTANCES, PLEASE CONTACT US AT HOSKIN FINANCIAL