12th June 2013
The UK now has one million workers over the age of 65 as the Belfast Telegraph reports. At Mindful Money, we would love to think this represents a huge and positive change in attitudes from employers and a massive opportunity for older workers to stay active and continue to contribute.
The news is part of the latest Office for National Statistics release which shows unemployment in general at 7.8 per cent measured from February to April and unchanged on the previous period.
Intriguingly despite the news, some experts maintain that the average date of retirement is too low. Here is David Sinclair, Assistant Director, Policy and Communications at the International Longevity Centre UK (ILC-UK), who says: “It is good news that we now have one million older workers. But the average age of retirement remains too low. In an ageing society, and with the state pension age increasing, it is important for individuals and the economy that we increase the number of years we spend in the workforce.
“Far too many people still leave the workforce too early, creating a huge drag on the economy. We must invest in improving the health of older people whilst also ensuring there is a supply of jobs to meet their needs. And we must ensure that discrimination does not act as a barrier to working longer. As our report last month highlighted, companies must do much more to innovate and adapt workplaces to meet the needs of an ageing society.”
That is certainly one point of view.
What concerns us a little however is that many people are continuing to work because they cannot afford to retire. They may have seen their pension underperform and then been shocked at the rise in the price of annuities when they came to convert it into an income. This is illustrated by research by insurer Partnership, reported by Mindful Money earlier this month, which showed you can expect a fall in income on retirement of as much as 40%.
They may have seen their employer cut back on their pension benefits, faced unemployment later in their working career, and, in some parts of the country at least, seen the value of their property fall limiting their ability to release equity from it.
There are few easy answers, though it is important to shop around when you convert your pension into a pension income. In addition, we think that anyone approaching retirement would do well to seek professional advice. That may help you identify exactly what your financial position is, and help you work out just how much you need to work yourself. And if you are one of the million, we hope you are doing so mostly out of choice not necessity.