You have more options for retirement than ever before. Here’s how to find the right one for you
These days, you have more choice over your retirement than perhaps at any point throughout history. From retiring early to exploring a “flexi-retirement”, you have lots of control over the transition from working to finally downing tools.
At Britannic Place, helping you to decide what kind of retirement you want is one of the very first things we’ll do when you work with us.
Even so, here’s a quick refresher of the various options for retirement available to you, whether you’re approaching or already at your post-work life.
The so-called “cliff-edge” retirement used to be the way that most individuals approached later life.
Under this paradigm, individuals would work up until a set age, perhaps the State Pension Age, and then retire immediately. Practically, this would mean finishing work on Friday and waking up Monday morning retired.
There’s nothing wrong with this approach, and it’s still a viable option for you if you’d prefer the certainty of knowing when you’ll finish work. This can also help to focus your retirement planning, as you’ll have an exact date for when you will retire.
One thing to bear in mind with a cliff-edge retirement is that it can feel like a large and immediate change.
Suddenly, you’ll go from having the structure of work every day to nothing but free time. This can be a relief to an extent, but it can also be somewhat of a shock to the system.
So, it can be worth having a plan for how you’ll spend your time in retirement to reduce this effect.
Early retirement is a fairly common future goal, with research by insurance provider Aviva finding that one in four people intend to celebrate their 60th birthday by retiring.
In fact, you may have read our previous blog on this subject, looking at the various financial and emotional considerations of retiring early, as well as a few tips that could help you get there.
Early retirement could be a great option for you, giving you the maximum amount of time to enjoy your wealth and live your life away from work.
The most pressing concern you’ll want to factor in if you want to retire early is whether you can afford to do so.
By finishing work sooner than you initially intended, you’ll likely need more money to maintain your lifestyle as you’ll have more years of retirement with no money coming in from your salary.
Rather than stopping working all at once, “flexi-retirement” involves reducing your working hours while still continuing on in some capacity.
This might be finding a part-time role that you can fit around your lifestyle, or even setting out as an independent consultant and using your knowledge and experience to help other businesses.
Taking a flexible approach to retirement is a popular choice. According to an FTAdviser survey of 1,000 people set to retire in the next year, 66% said that they planned to continue working once they had retired.
Much like retiring earlier, you’ll need to consider whether you can afford to flexibly retire, as it may involve giving up a portion of your income.
You may also want to consider your tax position if you plan to continue working in some capacity while also drawing on your pensions and other savings, as it may mean you end up paying more in Income Tax. Speak to us if you’d like to find out more about this.
For many people, work is central to their identities. As a result, some people choose to never retire at all.
Much like flexi-retirement, you can choose to work in some form of reduced capacity such as part-time or as a consultant. Regardless, even working full-time for your whole life is an option for you if that’s what gives you the most satisfaction.
Again, similarly to a flexible retirement, you’ll want to keep an eye on your tax position if you’ll be drawing from other savings and pensions on top of your salary, as your increased income may mean you’ll pay more in tax.
One important distinction to note here is whether you’re choosing to never retire, or feel that you have to continue working out of necessity.
Indeed, the Guardian recently reported on the UK’s “great unretirement”, in which retired individuals are finding themselves forced back to work in order to afford their lifestyles during the cost of living crisis.
If you’re considering coming out of retirement for this reason, it may be worth seeking financial advice first to find out whether you really need to be doing so.
Using your goals to decide what you want for the future
A good starting point for working out which of these retirements suits you is to use your goals to decide.
For example, if you want to travel around the world, never retiring might not be the most appropriate option for you. In this case, an early retirement may help you to achieve what you want, giving you enough time to fully explore the places you want to see – assuming you can afford to retire early, of course.
Meanwhile, if work is where you really feel at your best and your ultimate goal is to leave a healthy nest egg for your family, never retiring might be the best option for you.
By making goals first, you can make an informed decision for the type of retirement you want, based on whether you’ll then be able to reach those targets.
Speak to us
When you work with us at Britannic Place, we’ll always start with your goals first, using your targets for the future to help you decide what kind of retirement you want.
If you’d like to find out more about your retirement planning, please do get in touch today.
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.
This article is for information only. Please do not act based solely on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.