8th December 2010
In the report, Aviva reveals that there is going to be a significant shift in how people approach retirement, when the Government removes the default retirement age next April.
The change will mean that almost 700,000 people who reach retirement age each year will have the freedom to stop working at a time which suits their individual lifestyles and finances, rather than being told when to stop working.
Aviva's Clive Bolton says: "The removal of the default retirement age provides people with the freedom to design their own retirement.
"Some people will naturally choose to stop work when they start claiming their state pension, but many are likely to continue working as they genuinely enjoy their roles and gain both social and financial benefits. "
According to the Real Retirement Report, published today by Aviva, a third (33%) of retirees claim to have been pushed into retirement, either because their employer suggested it or because they reached the "normal age" for retirement at their workplace.
The changes to the law will bring about a welcome shift for those who view retirement as an outdated notion. Aviva says there is "strong evidence" that those approaching retirement do not see the move from employment to retirement as a clean break.
In the report, there is a clear trend towards down-shifting or people looking to reduce their work commitments prior to finishing work.
Currently, 58% of over-55s have chosen to down-shift – starting to do so at an average age of 57 – but this is expected to increase.
As Bolton adds: "As part of this move to DIY retirement, we expect to see more people down-shift their careers as they look for more flexibility and less pressure in the final few years of their working life. However, that said, a fifth of people retire due to health issues so while people can choose to work into later life, any additional boost to their finances should not be relied upon."
The advice from the experts is to carry out the following four-point checklist when considering retirement planning:
1. Draw up a complete picture of your assets
This should include all pensions, savings and investments as well as other assets such as your house. It is far easier to make decisions if you have a complete financial overview.
2. Track down your pension pots
If you've had more than one job in your working life, you may well have paid into more than one pension scheme. By combining them when you buy an annuity, you may be able to get a better deal.
3. Plan your retirement with your health in mind
If your job has certain physical or mental demands, it may become harder in later life. Therefore, the potential need to rethink your plans or stop work due to ill health needs to be considered.
4. Consider how your career can change
If you want to work into later life, think about how you can adapt your career. Does your job allow you to work fewer days or shorter hours? If not, you may want to think about how you can switch careers, which may involve getting new qualifications or retraining.