Delaying retirement could boost your chances of a secure financial future
With the persistently high inflation rate, it’s crucial for individuals nearing retirement to evaluate the impact of escalating living expenses. Adjusting or postponing retirement plans may provide enhanced financial stability in their golden years.
Delaying retirement has various benefits for your financial future. It can provide more time to build up pension contributions, which can lead to a more significant income in later life, access to additional support from the government, and more extended periods for employers to contribute to workplace pensions.
Consider your circumstances
On the other hand, there are some drawbacks of delaying retirement, including fewer years of employment for younger people entering the workforce, an additional taxation period; and potential inflationary pressures on wages if salaries remain static over an extended period. It is also essential to consider your circumstances before deciding whether to delay retirement.
Factors such as your current health, lifestyle, and financial situation should all be considered before deciding. Obtaining professional financial advice is essential to help you understand the implications of delaying retirement for your particular circumstances.
Here are some reasons why you might consider postponing your retirement
Increased State Pension: In the UK, you can defer your State Pension, resulting in a higher weekly payment when you later claim it. For every nine weeks you delay, your pension increases by 1%, which equates to just under 5.8% for each full year deferred.
Greater workplace pension: By working longer, you can continue contributing to your workplace pension, potentially resulting in a larger pension pot when you retire. Additionally, your employer’s contributions and potential tax relief will continue to boost your savings.
Maximise personal savings: Delaying retirement allows you to save more money, providing a more substantial financial cushion when you eventually stop working. This extra time also gives your investments more opportunity to grow.
Pay off debts: If you have outstanding debts, continuing to work can help you pay them off faster, reducing the financial burden during your retirement.
Improved health and wellbeing: Studies have shown that staying in the workforce can positively impact your mental and physical health, contributing to a higher quality of life during retirement.
Social Security Benefits: If you’re eligible for social security benefits from another country, delaying retirement might enable you to receive higher benefits based on your age and work history.
More time to save and invest for later life
Delaying retirement can give you more time to save and invest for later life. However, it is essential to weigh up the advantages and disadvantages carefully before deciding if this option is right for you. If you are considering delaying retirement, speak with us so that you can make an informed decision that aligns with your individual needs and goals.
A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, 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.