Please see the below article published by AJ Bell:
The early exit of people aged between 50 and state pension age from the workforce has a significant impact on both individual retirement plans and the wider economy. In fact, it could be costing the UK as a whole as much as £88 billion, according to the latest ONS figures.
While in some cases stopping work early will be a voluntary decision – for example as a result of early retirement – in other situations it will be less voluntary, such as ill-health.
Worryingly, although perhaps not surprisingly, people who work in low-paying or physically intensive sectors are six times more likely to stop working before state pension age because of ill-health than those working in other professions.
What’s more, women are more likely to stop working early than men, potentially further perpetuating the gap in pensions between the sexes.
Stopping working in your 50s – when in theory your earning power and ability to save should be at its highest – could also have a significant impact people’s retirement outcomes.
In many cases it will mean making your retirement income stretch for much longer, meaning you have to live for less in your later years.
It also potentially impacts on people’s health and wellbeing. For all those reasons, supporting people in their 50s to stay in work for longer should be an absolute priority for policymakers.
Our Comment
It’s never too soon to prepare for retirement, for most of us a well-earned stage in your life.
When planning for retirement it’s not just about having enough money – although this is important. You need to be ready for retirement emotionally.
Retirement may take many forms for different people. There is no right or wrong approach. It’s useful to be prepared and flexible in our approach.
Retirement is a stage that transforms an individual’s life. Retirement can be viewed as a time when people cease employment and engage in activities other than a job or career related work.
Politically, for our policymakers, we need cross party consensus and buy in to a long-term strategy for pensions and retirement planning. You can’t plan for these long-term issues with a short-term political focus from any party.
Policies need to take account of all of the issues and buy in doesn’t just need to be from different parties but also from different areas of government, the Treasury, the DWP etc.
We also need stability, particularly in long term planning issues such as pensions. People need to know that the legislation in place is long term to have the confidence we need in pensions.
Andrew Lloyd DipPFS
31/08/2021