9 February 2022
In 2022, the idea that you become an “old person” when you reach your 50s and 60s is becoming increasingly outdated.
After all, the UK’s average life-expectancy has steadily grown over the past 100 years. According to Statista, the current UK life-expectancy is around 81, compared with just 67 in the mid-20th century. What’s more, the Centre for Ageing Better states that one-third of the UK’s workforce is now over 50.
All this data tells us that retiring in your early 60s, for example, would afford you a much longer retirement than your parents might have enjoyed, and it could prompt you to continue working in your later years.
Plus, some recruiters are actively searching for older employees. According to Glassdoor, companies including Boots, Aviva and National Express are considered “age-friendly” employers who seek out older people during recruitment drives.
There are plenty of opportunities for you to stay in the workforce or re-join in retirement, but the question remains: is working later in life the right decision for you?
Here are seven practical pros and cons of working later in life, so you can consider how it may or may not suit your personal and financial needs.
The pros of working later in life
1. Work can be a meaningful form of social contact
According to the NHS, 2 million people over 75 live alone, while 1 million say they go more than a month without speaking to a friend, family member or neighbour.
Indeed, even if you haven’t yet reached this age group, the Covid-19 pandemic has proved a lonely time for everyone, and you may empathise with those who feel isolated as they get older.
Working later in life, even in a part-time role, can be a meaningful form of social contact that can help you develop new friendships and stay socially stimulated in your later years.
2. You might be able to work from the comfort of your own home
You don’t have to work a typical nine-to-five to enjoy a comfortable working life – in fact, you may not even have to leave home at all.
According to YouGov, as of September 2021, 50% of British workers were working from home, up 13% from before the pandemic. A work-from-home position may be a great compromise if you want to work later in life, but don’t want the hassle of a commute.
The jobs you can now do from home vary hugely – from teaching, to consulting, to customer service positions – so you may be surprised at what you can achieve from your home office!
3. You have valuable wisdom and experience to pass on
After cultivating years of valuable experience in your career, you might wish to bestow some of this wisdom in your later life.
Even if you don’t want to continue working in your pre-retirement job, you could consult on your area of expertise, or write about your experiences for online publications or blogs. Influencing the next generation could be a hugely fulfilling way to spend your later working years.
4. Working later in life can help supplement your pension income
As the cost of living surges, many people are concerned that their pension will not last as long as they had hoped.
Energy, fuel and other essentials are rocketing in price; according to the Guardian, some households could see as much as a £1,200 increase in their bills “overnight” in early 2022.
In addition, the UK government is adjusting its regulations when it comes to pensions. The State Pension Age is now 66, and is forecast to be pushed back to age 68 between 2044 and 2046. If you plan to rely on the State Pension for a portion of your later-life income, you may need to extend your working years until you are eligible to receive it.
Even if you have strategically contributed to your pension pot throughout your career and are happy with its current value, supplementing your pension income with later-life work could be beneficial in the face of the rising cost of living.
The cons of working later in life
1. You may want to fully retire
If you have spent your working life making plans for your retirement and looking forward to it, the idea of returning to the workforce may not inspire you. You might have exciting plans, such as travelling or helping older children with grandchild care, that mean working later in life isn’t feasible for you.
In addition, if you have health concerns at this stage in your life, you may wish to prioritise rest and healthcare over work.
2. You might wish to lend your time to your hobbies and passions
Although there is a wide range of jobs available for older people, you may not find one that you are passionate about. You could instead wish to pursue a hobby or passion that you pushed to one side during your working years, for example.
Indeed, many people decide to volunteer during retirement. Statista reports that in 2020 and 2021, 64% of people aged between 65 and 74 volunteered at least once in England, with 53% of over-75s volunteering in the same time period.
If you have always wanted to give back to the community or pursue a favoured hobby or skill, you might choose to volunteer your time instead of working for a wage.
3. You may need to consider other savings options after triggering the Money Purchase Annual Allowance
If you’ve started flexibly drawing your pension, the Money Purchase Annual Allowance (MPAA) may limit your tax relief on further pension contributions.
Once the MPAA is triggered, the amount you can contribute to your pension each tax year, that will receive tax-relief, is reduced from £40,000 to £4,000.
This means if you do begin earning money from later-life employment, especially if you are earning a significant sum, you may not be able to contribute much of it back into your pension pot without a tax charge.
Instead, you might need to consider other saving or investment options, such as an ISA.
If you are unsure whether you have already triggered the MPAA or you want to know more about it, speak to a professional for guidance.
Get in touch
If you are considering working later in life and are weighing up your options, working with a professional could help you achieve your goals. We can help you plan for later life in the face of the rising cost of living and inflation.
Email email@example.com or call 0161 8080200.
A pension is a long-term investment. The fund value may fluctuate and can go down, 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. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.