An American reporter, visiting the Soviet Union after the Russian Revolution in 1919, wrote “I have seen the future and it works”. The Calvinist Chancellor and Prime Minister Gordon Brown adapted the quotation to his own view of life, saying “I have seen the future, and it is work”.
The economic advantages of working after what many would regard as a normal retirement age are clear and are appreciated by a growing number of UK residents. The proportion of 50 to 64 year olds in work has risen from 65% in 2007 to 71% today.
To take an example of the financial benefit of delaying retirement, if someone with an income of £40,000 p.a. net of tax who spends £32,000 and saves £8,000 p.a. were to delay retirement by just one year they would be £40,000 better off. Their pension pot would not be depleted by £32,000 and an extra £8,000 would have been added to their savings.
Other advantages of delaying retirement are that the amount which can safely be withdrawn from a pension plan under ‘income drawdown’ will be increased as also will the rates available for those who choose to buy retirement annuities.
Set against this is the awareness that the clock is ticking and there may be more enjoyable things to do with one’s remaining years than work. This applies particularly to employees. Research has found that self-determination is an important factor in job satisfaction, and the self-employed enjoy higher levels of happiness than the employed.