While many companies have seen a gradual or full return to office life as we emerge from the pandemic, others have chosen to adopt a more fundamental shift in how and where employees work. With hybrid, remote and flexible working now part of everyday 9-5 language, the impact is fast becoming evident on retirement choices.
The Benefits of a Gradual Shift
In the same way that COVID-19 has allowed many employees far wider choices regarding how and when they wish to work, this flexibility is expanding into the retirement sphere. More workers are trending towards a phased retirement – where hours are reduced little by little – and a ‘softer’ exit from working life in comparison to the traditional, strict, and rather sudden end to their careers.
Phased retirement has many unique benefits for both employer and employee. For companies – especially smaller outfits that rely on the expertise, knowledge, skillset, or connections of key people – a more gradual retreat from working life allows them to adapt processes more easily. This might include assigning a new in-house representative to key clients, helping to preserve reputation and nurture important relationships. It could also mean training team members or new recruits in essential skills for a smooth transition.
Make Your Savings Last Longer
For individuals, the gradual process of a phased retirement makes it far easier to adapt financial arrangements for the post-retirement years especially in the light of the rising state pension age. The higher degree of financial stability offered by a phased retirement is enhanced by the fact that some workers may be eligible to continue contributing into their pension, building a higher-value fund for when the time comes. Any withdrawals made from the fund during this time will naturally be reduced (as the employee will still be earning income), helping any savings to last longer.
There’s also the lifestyle perspective to consider. A sudden loss of income compared to a gradual one can make it far easier for the individual and their family to adapt, leading to better mental health and helping individuals make more informed decisions about how they wish to spend their post-retirement years.
Stay on Track with Retirement Plans
The latest statistics from the ONS show that 1 in 10 people aged over 65 are still in work. While we need to consider the fact that COVID-19 has disrupted retirement plans for many people, a healthy financial retirement strategy will help every individual to stay on track with their original retirement ambitions. Looking at things from another angle, ONS research shows that older workers are far more likely to be self-employed than younger workers. This adds another dimension to financial planning and makes it all the more important to seek professional advice with reaching your goals. For specialist guidance, contact TR Wealth today.
Risk Disclaimer: The information contained within this communication does not constitute financial advice and is provided for general information purposes only. No warranty, whether express or implied is given in relation to such information. Vintage Wealth Management or its associated representative shall not be liable for any technical, editorial, typographical or other errors or omissions within the content of this communication.