Are you reluctant to retire? Here’s how financial planning might benefit you
There are more over-65s in work now than there were at the start of the century. Here’s what you need to know if you are reluctant to retire at the “right age”.
If you are approaching retirement age but have no plans to slow down or stop work, you aren’t alone.
The Centre for Ageing Better reports that in the year 2000, there were 457,000 over-65s still in work. In 2022, this number had risen to nearly 1.5 million.
You might be reluctant to retire simply because you love what you do – or you could be worried about running out of money if you retire too early.
Do either of these scenarios sound familiar to you? If so, continue reading to learn how your preconceptions about retirement might be outdated, plus how a Kellands financial planner could help you determine when you can afford to retire comfortably.
If you love your job, a phased retirement might work in your favour
If you are lucky enough to have a career you truly love, you might feel sad about the idea of saying goodbye once and for all.
You may be aware that your work gives you a purpose, keeps your energy high, and allows you to interact with colleagues and customers, all of which boosts your wellbeing. This indicates that a “hard stop” retirement might not suit you.
Yet as you age, it is important to recognise when it’s time to take life at your own pace. All the wonderful aspects of your work may also come with fatigue, a lack of time spent with your family, plus physical aches and pains too.
If this sounds like you, a phased retirement could be the ideal way to achieve the best of both worlds.
Phased retirement is more popular than you might think – Aviva reports that as of 2023, 40% of 55- to 64-year-olds planned to move into semi-retirement (otherwise known as phased retirement) before reaching State Pension Age.
Key advantages of a phased retirement for those who love their work include:
- Continuing to fulfil your life’s purpose
- Maintaining cognitive sharpness
- Staying physically active
- Spending more time with loved ones
- Having more free time to explore new hobbies
- Earning an income into your retirement years.
If you’re considering a phased retirement, make sure to discuss the financial implications with a financial planner first.
Continuing to earn money into retirement may be good news, but if you’re simultaneously drawing from your pension, you could unwittingly fall into a higher Income Tax bracket than you planned.
It could also mean that your loved ones inherit more money than if you’d retired earlier. While this is a positive thing, it may be worth considering how this surplus will affect their Inheritance Tax (IHT) bill.
We can help you plan your phased retirement in a way that suits you emotionally, physically, and financially.
Cashflow planning software can help you work out your ideal retirement age
If you are reluctant to retire because you are concerned about funding a comfortable retirement, this is highly understandable. After all, the cost of living crisis may have made you question the affordability of your plans.
Care fees could also be a concern, with Age UK reporting that it costs around £800 a week for a place in a care home, and £1,078 a week for nursing care, as of June 2024.
As of the 2024/25 tax year, you will need to pay for all of your own care if your total capital stands at more than £23,250. If it stands at between £14,250 and £23,250, you may be required to fund some of your own care. These rules apply in England and Northern Ireland, and may differ if you live in Wales or Scotland.
While there are plans to cap the total amount a person can spend on care in their lifetime at £86,000, starting in October 2025, this new rule may be subject to change in the future.
To help alleviate any anxiety around affording your retirement, you could work with a financial planner who uses cashflow planning software.
In simple terms, cashflow planning software:
- Takes in all the details of your financial circumstances, from savings and investments to debt and other key expenses
- Applies various scenarios outside of your control, such as investment returns and inflation, both of which could have an effect on your wealth in retirement
- Creates projections based on this data, showing how much you have to live on in retirement, and the age at which you can comfortably retire
- Gives you immense peace of mind as you head towards your retirement years.
Cashflow modelling could give you the freedom of choice over when to retire. If you’re not ready yet, that’s fine – your financial planner can help you formulate a retirement plan that suits your goals.
Over the course of your late career and retirement years, we’ll keep checking in to ensure your plan is still on track. We’ll give you the chance to update your plan if your life changes, such as if you sell your home or welcome a new grandchild into the family.
In the meantime, if anything unexpected happens, your financial planner can work with your family to protect your wealth and reduce stress.
Get in touch
Are you approaching retirement age and unsure how to begin planning this next chapter? We can help.
Email us at hale@kelland.co.uk, or call 0161 929 8838.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate cashflow planning.