Do your retirement plans involve taking up a new hobby or travelling across the world to your favourite holiday locations? Or are you planning to work during your golden years?
As the world of work changes and the state pension age increases, it is becoming increasingly important to consider your retirement earlier than you might think.
For example, it’s best to consider how much you would need to start saving today in order to enjoy your retirement later. Workers sometimes tend to take career breaks or take time out of the work system to care for loved ones, and then too late realise that they may get less at retirement than what they were expecting.1 Moneywise columnist Jeff Prestridge argues that you shouldn’t rely on the state pension to fund your retirement.
In the UK since April 2016, people are required to have 35 years’ of full national insurance contributions (NICs) in order to receive the new full flat-rate state pension of £155.65 a week.1 Anyone with fewer than 35 years of NICs will receive a reduced pension.
According to the Department for Work and Pensions, by 2020, 85% of people reaching pension age will have at least 35 years of qualifying NICs. The state pension age continues to rise due to jumps in life expectancies.
Currently the UK pension age for men is 65 and the age for women is 60. From 2020 both men and women will have to wait until they’re 66 before they can claim state pensions.
Les Cameron, retirement expert at Prudential says: “The state pension represents a third of current average earnings, so further retirement savings will be required to ensure your income lives up to expectations.”
One way to increase your state pension benefit is to make additional voluntary national insurance contributions. More information around this can be found at gov.uk/voluntary-national-insurance-contributions. Alternatively you could open your own tax-friendly Individual Savings Account, and save as much as you can month to month.1
In the US, people live an average of 20 years after retirement, and the three most common options to save for retirement are retirement plans offered by an employer, savings and investment accounts, and Social Security (similar to the UK’s national insurance contributions).2 However only fewer than half of Americans have calculated how much they actually need to save for retirement.
Retirement age has an impact on the recruitment industry and it’s important for businesses to utilise the older generation of workers to remain competitive.3
If we look at the 50 – 64 year old UK age group, the number of people in work has increased in every quarter since May – July 2014. Also, more than 73% of people in that age group are economically active which means they’re either working or looking for work. Almost 11% of people who are 65 or over are in employment.3
This makes it clear that people over 50 aren’t slowing down or getting ready for retirement, and businesses need to start supporting this momentum while also reaping the benefits of the skills and expertise this demographic can bring to the workforce.
People in later life are increasingly looking to stay in work and it’s important that more businesses look for ways to support them. We’re in an era where certain industries are struggling with skills shortages which, coupled with high youth unemployment, are many reasons why businesses should focus on attracting older workers to their business.3
Our employee benefits at Impellam include access to a range of financial services providers who are available to our people seeking any sort of financial or professional advice. We provide such services to our people in order to provide them with fulfilment and a sense of purpose. Whether you’re an HR consultant advising your employees, or any person earning an income, it’s important to start thinking about how you will build a sustainable life after retirement – if you haven’t already done so!