How do I retire later in life?



The age at which we choose to retire is by no means set in stone. It differs greatly between individuals, and improvements in life expectancy are making the traditional retirement age – between 60 and 65 – a thing of the past. 

Circumstances and wants of all varieties filter into the decision, but while the popular consensus is generally geared towards retiring as early as possible, many people don't view retirement through such a positive lens, wanting to retire later in life. If this applies to you, how can you do so?

Can you retire later?

If you want to work longer, because you still enjoy your role or you need to earn more money in order to shore up your pension pot, then you can do so, pure and simple. However, there are some things to bear in mind that might impact your ability to continue working.

The most important issue to think about is whether or not you will physically be able to continue your role as you age – for people in trades that require lots of strenuous activity, the answer will likely be no. If this is an issue, talk to your employer and you may be able to move into a less-demanding role that will allow you to keep working, without endangering your wellbeing.

If this isn't an option, then there's no need to fear – there are all sorts of employment opportunities out there for older people, and your years of experience will almost certainly be positively received. As the population ages, working till a later age is becoming more normal.

Pension options for late retirees

One of the best things about retiring later is that you can use the additional years spent working to improve the size of your pension pot. If you've already paid off your mortgage, a larger portion of your wages can be put aside, growing funds quicker than earlier in life.

With more money when you retire, you'll be able to enjoy a better standard of living when you do choose to hang up your tie – an enviable situation.

Improved annuity rates

This positive state of affairs is magnified by the fact that the longer you wait to cash in your pension, the better annuity options you'll be able to take advantage of. This means better annuity rates, since the pension company will assume you are closer to the end of your life – an improved return on your investment.

A better State Pension

If you reached the pensionable age before April 6th, 2016, then you can defer your pension and receive either high weekly payments or withdraw a one-off, lump sum. 

In the case of the former, your pension will increase 1% every five weeks you put off receiving it (10.4% a year). For the latter, you can claim a one-off lump sum of the monies entitled, plus interest of 2% above the Bank of England's base rate, if you've deferred for at least 12 months.

If you have or will reach State Pension age after April 6th, 2016, your payments will increase by 1% for every nine weeks you defer (5.8% each year).

Other investments

Investments such as stocks and shares, ISAs and so on will also have more time to mature and grow if you retire later on, once again giving you more money to live on while retired.

If you'd like to retire later in life, then do so. Aside from issues relating to your ability to stay in the workplace, you will most likely improve your pension chances, boosting your income when you eventually decide to retire. As with any issue regarding retirement, however, do the maths and get a full idea of what your options are in a variety of scenarios.

Return to Retirement Planning home.