Do you foresee yourself being retired by your 70th year of life? A portion of the response may hinge on the way we perceive retirement. The traditional notion of retirement that includes a comfortable lifestyle with holidays on cruises, just as our seniors cherished, seems disconnected and unattainable to many of today’s workers.
The incremental life expectancy coupled with less abundant pensions has resulted in more than two-thirds of UK adults predicting retirement in the 60s to be an outdated concept soon, as stated in Canada Life’s recent study, a company specialising in retirement.
The Life100+ research discusses the concept of “longevity megatrend,” revealing intergenerational tension. Young adults in their 20s and 30s are already under the impression that they have less financial stability than their elders. Some individuals in their 40s and 50s are confronting supplementary challenges, such as providing care for the seniors in their family.
Most people in the survey anticipated inheritance eventually, but a very few recalled ever discussing it. This lack of communication can potentially hinder effective tax planning during the Great Wealth Transfer.
Simultaneously, the metaphorical ‘Bank of Mum and Dad’ is buzzing with activity. Data collected by Canada Life displays that 19 per cent of people aged over 65 are still financially assisting their independent children. Assisting with housing deposits and mortgage transactions is increasingly frequent. Additionally, many provide unpaid childcare services.
Given all the economic and demographic hurdles, it appears quite natural to consider extending work life as an alternative.
However, there exists a major snag, even if you still have the potential to continue work. Despite the increased life duration, recruiters fail to acknowledge this trend.
“How do we ensure the continuation of work life amidst increased longevity is a major challenge”, comments Lindsey Rix-Broom, CEO of Canada Life.
The ones laid off in their later years will agree to the uphill battle of seeking new job opportunities. The advent of AI and digital technology might add to the difficulty of enhancing your skillset and making a career switch later on.
Companies may soon need to reassess the importance of elderly workers, according to the recruitment consultancy 55/Redefined. They forecast a 25% decrease in the UK’s working age population (aged 16-60) in the upcoming two decades. Simultaneously, the over 60s population is predicted to surge by 40%. Given the UK’s looming pension crisis, it is likely that many people won’t be able to fund their retirement.
The firm is also advising numerous businesses on strategies for employing those aged above 50, and aiding current employees to extend their working lifespan through skills enhancement and retraining. Age discrimination often goes unnoticed in organizations’ diversity, equality, and inclusion (DEI) strategies. In fact, two-thirds of UK businesses have not pencilled in age as a future diversity parameter.
Numerous elder professionals who were unjustly expelled from the workforce before they were ready have found solutions in constructing a “portfolio career”. This includes, freelancing, founding their own enterprises, or serving as non-executive directors if they’re fortunate. Depending on your financial health, this could serve as a beneficial “retirement bridge” until funds from previous pension schemes come into effect.
However, Rix-Broom expresses another concern — the disconnection people often feel from their long-term savings. She observed most people are unaware of their exact pension savings, focusing more on their current finances rather than planning for the future. To bridge this gap, pension providers are rolling out various digital solutions to engage the public (like the Scottish Widows’ Pensions Mirror tested on Instagram) and the impending UK pensions dashboard will undeniably aid in tracking multiple savings accounts.
Still, those who have successfully gathered a substantial retirement fund are often in pursuit of a more fulfilling experience. According to economist and longevity expert Prof Andrew Scott, living longer presents an opportunity for a “second demographic dividend”. He estimates that those who live up to 100 have approximately 100,000 additional productive hours to contribute to society compared to those living up to 70.
“What potential opportunities might you discover as an associate of the UK Fire HQ community on Facebook? This team, devoted to the ideals of Financial Independence and Early Retirement, encourages its members towards greater financial security. What we term as ‘retirement’ is open to interpretation. Numerous members could comfortably retire in their 50s or 60s but decide against it.
The main divergence, as explained by a member, lies in the absence of financial obligations driving the need to work. An alternate moniker suggested is being ’employed for enjoyment’, an amusing yet apt epithet. He emphasises that if your financial investments render work optional, the decision power shifts to you regarding job selection and working conditions.
Many members have accepted gratifying although less remunerative jobs after ending their professional careers. Others have opted for voluntary responsibilities at non-profit organisations, or serve as regional councillors.
Beyond work commitments, leisure time is highly cherished. Spending quality time with grandchildren, indulging in hobbies, and travel ranks high on the priority list. Interestingly, one member highlighted that upon exiting the professional sphere, we could contribute more towards society than we did as part of corporate entities, solely focusing on profit generation.
When considering retirement strategies, it is essential to transition away from the concept of discontinuing work, and instead, anticipate and prepare for the subsequent phase in our professional journey– be it a career branch-out, development of diverse skill set or devoting time to charitable activities.
Online resources are abundant to assist people in assessing their preparedness for retirement in monetary terms, however, few tackle this aspect. A beneficial tool that caters to this area is Prof Scott’s 100 Year Life website’s complimentary diagnostic tool. A brief 5-minute questionnaire will provide you with an evaluation of how equipped your future self could be in terms of career, skills, and lifestyle, and offers advice on enhancements.
Envisioning your retirement is personal and saving enough to sustain your future lifestyle is crucial. However, investing effort into learning new skill sets, fostering your network, and maintaining physical wellbeing are equally significant.” – Copyright The Financial Times Limited 2024