A report suggests that life after 50 will be radically different for those who have recently celebrated the milestone or are nearing it when compared to previous generations, and it could have implications for your financial plan.
The research from Aegon looks at how lifestyles are changing for over-50s, dubbing this chapter of life the “second 50”. It states vast prospect changes mean those in their 50s can’t simply look at what’s gone before to navigate the next stage of their life.
Traditionally, many people followed a three-stage life model of education, work, and retirement. However, that’s changed over the last few decades. It’s now not uncommon to retrain to swap careers during your working life, come out of retirement, or even take extended breaks from work.
So, what’s driving the change and how could it affect the next stage of your life? Here are three interesting insights from the report.
1. Longer lives mean retirement has more possibilities
Life expectancy has increased, and it’s led to retirees embracing new prospects.
According to the report, between 2015 and 2020, the number of people aged 65 and over increased by 12%, while the number of people aged 85 and over jumped by 18%. Life expectancy is anticipated to continue improving too. In fact, 1 in 4 children born today can expect to live to almost 100.
Being retired for longer has opened up new possibilities. When workers were asked how they hope to enjoy their time after work, the top answers were:
- Spending more time with loved ones (53%)
- Travelling (45%)
- Pursuing new hobbies (33%).
While retirement might be associated with putting your feet up, that doesn’t have to be your focus. The milestone is a great chance to think about what gives your life purpose or makes you happy.
A longer retirement comes with challenges too – 45% of workers said they worry that they’ll run out of money. Alongside thinking about your retirement lifestyle, considering how you’ll use the wealth you’ve accumulated is crucial.
2. A “hard stop” retirement is becoming less common
Given that the average retirement is lasting longer, it’s perhaps unsurprising that a “hard stop”, where you give up work completely on a set date, is becoming less popular. Indeed, only 27% of people currently in employment expect to follow this route.
While money may be a factor for transitioning into retirement for some, the main reasons were positive – 57% said they enjoyed working life and 54% cited a desire to keep their mind active.
Those who are weighing up alternatives to a hard stop retirement are most likely to consider working part-time or on temporary contracts before they eventually retire. 1 in 10 people state they plan to continue working as they currently do throughout their life.
Greater flexibility in how you retire could mean you’re able to create a work-life balance that suits you during your second 50.
If easing into retirement is attractive to you, financial planning could be useful. You might want to consider whether you’ll still pay into a personal pension, if you should defer your State Pension, and how to manage your tax liability, which we could help with.
3. Workers in their 50s expect to spend a fifth of their retirement in ill health
While longer life expectancy is good news, many people in their 50s are worried about ill health.
Those aged between 50 and 59 expect to spend a fifth of their retirement in ill health. It can be difficult to think about, but considering your preferences and how you’d cope could provide security if you do need support later in life.
Despite people in their 50s predicting they’ll need support for a significant proportion of retirement, just 25% have factored future care into their saving needs. In many cases, people receiving care will need to cover at least a portion of the cost themselves.
Setting aside some of your pension or other assets to cover a potential care bill could provide you with peace of mind if you’re among the 82% who are very concerned about health in older age. It might also mean that, if care is required, you’ll have more choices, such as choosing a care home that’s close to your family or has facilities that suit your needs.
We can work with you to make a care fund part of your wider retirement plan.
Get in touch to create a financial plan that considers your “second 50” goals
Turning 50 can be an exciting milestone and might signal the start of changes in your life, whether you plan to retire or not. Working with a financial planner could help you set out your goals for the next chapter of your life and create a financial plan that may help you achieve them.
Please contact us to arrange a meeting.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
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