Retirement is something we can all look forward to enjoying one day, but for many, the 'R' word has taken on a new meaning. Company Director and Financial Planner Andy Jervis explores how retirement has adapted over the years, and how views about it are still rapidly changing. "I’m just intrigued," I said to the audience of financial advisers in front of me. "How many of you are enthusiastically looking forward to retirement?" Three hands went up. "And who here would be happy if they never retired?" I asked.
About 20 hands went up. "How many of you promote yourselves as retirement specialists?" At least half of the room responded. "Could it be," I said, "that many of your clients feel the same way as most of the people in this room? In other words, the prospect of retiring isn’t something that appeals to them? Do we need to reframe the question?" Will you be retiring? Or just working in a different way? The reality is that the rules of the game have changed. Three or four decades ago, it was much more common to have a 'job for life', often supported by a generous pension scheme, and a fixed retirement date that was non-negotiable.
Retiring at 65 was the norm, and it was expected that you would leave work at that age or earlier. Since then a number of things have happened. Those generous pension schemes have all but disappeared, along with the idea of a job for life. People are living much longer and remaining healthier until advanced old
age, and employers have changed their
policies to attract and retain older employees. At the same time the state retirement age has been pushed back further from 66 currently to 68 for anyone under 40, with further changes likely. More flexible
Whilst the old fully funded employer pension schemes have withered away, the good news is that pensions are much more flexible than they used to be, and it’s now possible to draw an income whilst still working and even vary the amount of your pension from year to year to suit your circumstances in some cases. This means that people are able to plan their lives around topping up their income, so part-time working in older age has become much more common. As retirement flexibility has improved, so have attitudes changed too. An example is a rise in older self-employed people, with the number of over 50's in self-employment up by over 58% in the last 10 years. When asked why they had turned to self-employment, common answers included being able to work more flexibly, having more control over work and hours, and the freedom to choose where to work. When people are expecting another 20 to 30 years of active life from age 65, the prospect of retiring altogether and in the process losing many of your social connections and life purpose, does not seem an attractive one compared to the idea of continuing to exercise your intellect, passing on knowledge to others and taking your place in society. Continue to do the things you enjoy There will, of course, still be plenty of people for whom retirement cannot come soon enough, either because they don’t enjoy work, or it is too physically or mentally demanding, or they have other interests or projects to pursue after work ceases. They will want to make sure that they can continue to do the things that they enjoy without the benefit of an income from employment, and as always good planning is needed. But increasingly the experience of our Financial Planning team is that many people don’t have firm views about retirement, and often expect to be engaged with work in some form well after ‘normal’ retirement age. This means that instead of a planner using their expertise to calculate the financial numbers at retirement, their conversations are much more likely to be around planning for flexibility, enabling financial independence and freedom of choice, as well as helping people to realise aspirations in later life that might have seemed impossible when work was all-consuming. In our practice we’ve worked with many people who are doing things in ‘retirement’ that make life fun, engaging and rewarding, including running their own lifestyle businesses and taking lots of time out to experience the glories of life. A Different Approach This type of planning requires a different approach to working with clients, with skills of listening, coaching, guiding, and challenging becoming just as important as being able to select financial products and do tax calculations. It’s why our advisory team is trained in these skills in order to truly understand what our clients are seeking to achieve and to help steer them through the thought processes that make for good decisions. We are fortunate to live in an age when the choices available to us all have never been greater. However more choice can also lead to more uncertainty, and a trusted guide can be invaluable. That’s never so important as when trying to decide what you want to do with the rest of your life. It’s a question that we understand, and one that we face regularly in our day-to-day work. Our team helps lots of people in this situation, and they can help you too. For more information, you can drop us a line and we’ll get back to you to have a free initial chat.