New research shows that more than a third of adults aged 45-54 are not making plans for the years before retirement. People over the age of 50 may face different challenges in their careers and personal lives before they retire.
A survey of 1,000 people recently carried out by Opinium, on behalf of Hargreaves Lansdown, shows that many people don’t even think of preparing for their pre-retirement years.
Are older adults ready for pre-retirement?
Although the majority of people aged 45-54 are ready for the autumn of their careers, 34% are not. Younger people are slightly more aware of the need to plan ahead. Only around a quarter of 25-44-year-olds have no plans for their pre-retirement years. So, roughly one in three adults approaching retirement are not ready for the journey.
The Opinium survey indicates that starting a business in later life is not a popular goal. In fact, only 5% in the 45-54 age group wanted a change of career or to start a business. In contrast, 13% of 18-34-year-olds have ambitions to start their own business one day, and 15% would like the option to change career when they are older.
Just over half of older adults expect to stay in their current career as the retirement threshold approaches, with 10% of those hoping to switch to part-time hours.
Why is it important to plan for the years before retirement?
Circumstances can change at any point in your working life, but during the pre-retirement years, it’s much harder to adjust and start again.
Analysing the results of the retirement planning survey, Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, warns, “These findings point to a worrying lack of planning among those closest to retirement on how they plan to spend their remaining working years.
She goes on to explain that people over 50 should “embrace this time as an opportunity to inject new life into their careers rather than just counting down the days until they finish working.”
There are many reasons why continuing to work and being adaptable in our careers is beneficial before and after retirement.
- People who work in stressful or physically demanding jobs and those going through the menopause may find it too exhausting to continue at the pace they were able to maintain in their thirties and forties. In these cases, it’s best to have a plan for slowing down before retirement.
- Late middle age presents the challenge of caring for elderly parents, sometimes in addition to bringing up a family. Some people still in work might be contributing to the care of new grandchildren. In retirement and before, there can be too many family commitments to make work the main priority.
- Redundancy rates increased during the pandemic, with older adults the most affected by this. It’s wise to have a new direction in mind just in case.
Older workers are protected against age discrimination in the workplace. Therefore career progression, or even a new career, should be a possibility in the years leading up to retirement.
When should you start planning?
It’s never too late to start getting ready for a happy and productive retirement, particularly financially. Building savings and investments early will supplement pensions and enrich leisure time in retirement. Financial planning and savings can also support a reduction in your working hours when it suits.
Helen Morrissey recommends a gradual retirement, rather than stopping work suddenly. She explains, “Easing into retirement by working part-time is often a better way of managing such a huge change from a financial and emotional wellbeing perspective.”
Younger generations are more ready to see the opportunities to try something new further down the line. In advance of this, take advantage of training opportunities in a different field, or experiment with a side hustle. That way, the transition to a late-stage career change, or a small business in retirement, can be managed more smoothly.
What if you haven’t planned for retirement?
With 34% of people aged 45-54 having no plan for their remaining working years, you are not alone. With a busy life, it’s hard to think beyond the next day, and if work is drying up, it’s easy to become despondent.
There are three simple things you can do:
- Start saving, even if it’s only a little.
- Begin to pay off debts, including credit card debt, and get advice if necessary.
- Create a mind map of your retirement years, which takes into account your goals and commitments.
In her book, 55, Underemployed, and Faking Normal: Your Guide to a Better Life, Elizabeth White strongly advocates downsizing and building a support network to help with the emotional impact of a new phase of life.