Working Until You Drop Isn’t A Retirement Plan…

Millions of people have struck on a novel way of spending retirement. Instead of quitting work and travelling the world, they aim to carry on working, right to the bitter end.

An astonishing one in five of us have given up on the idea of retirement altogether. Instead, we plan to “work until we drop”, according to new research from insurer Aviva.

That sounds fun..(!)

A Job For Life

This unwelcome trend is already upon us. More than one million people now work beyond state retirement age, a figure that has more than doubled in the last 20 years.

Now we’re taking the process a step further, with plans to work until we draw our final breath.

Just a few years ago, when people talked of working until they drop, it was a complaint. Today, it is beginning to sound like an aspiration.

Even if you like your job, you have to accept that all good things come to an end. Preferably before you flop dead at your workstation.

The truth is that people only say they will work until they drop because they can’t face up to the alternative, which is to save for retirement, either in a pension or tax-free ISA.

Working until you drop isn’t a retirement plan. It’s a cop-out.

Dead Money

With wages stagnating, some people genuinely can’t afford to save in a pension. They may have to carry on working, or hope that the state pension will see them through.

But I’ve lost count of the friends who tell me they can’t afford a pension, shortly after showing off their whizzy new gadget or posh new frock.

The truth is that they would rather spend their money having a few hours of fun today, than funding years of security at some point in the future.

There is another way we are sticking our heads in the sand. Research by insurer Aegon shows that currently people expect a retirement income of £35,000 a year, yet will get just £12,000 on average.

If you don’t fancy living on £12,000 a year, or working until your vital organs cease to function, there is only one way to plug the shortfall.

Pensions Aren’t A Political Issue

The government has made it a lot easier for us to save for our future. It is scrapping unpopular shackles on what you can do with your pension pot.

And it continues to offer valuable tax relief on pension contributions, at either 20%, 40% or 45%, depending on your tax bracket.

It also allows every UK adult to save up to £15,000 a year in an ISA, and take all their returns free of tax.

So for once, you can’t tell politicians to drop dead.

Unless yours really is a job to die for, you need to start saving today.

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Harvey owns shares in Aviva.