…so let’s get our heads around flexible working… and self employment. How major shifts in demographics are changing the way we look upon retirement, writes Tony Watts OBE. So what are the implications for our financial plans?
I was part of a stimulating two-day gathering recently in London where several hundred people discussed the concept that we are, arguably, heading into an era of “no retirement”. Or at least, a time when retirement becomes more of an option rather than an inevitability.
How so? Well four inexorable situations are currently combining to change the face of retirement for ever.
Firstly, we are living longer, with many of us reaching our 60s, 70s and even beyond in reasonable health. So not all of us are that keen on giving up work when we still enjoy what we do.
Secondly, while we may be living longer, large numbers of older people are entering later life without enough put by to secure a comfortable retirement anyway. The average amount put aside by retirees is just £30,000 – hardly enough to cope with a few slightly showery days.
Thirdly, the Government is keen to keep us all in work as long as possible to stave off the time when they have to shell out our State pension, and (unsurprisingly) they would prefer for people NOT to head into retirement dependent on the State. More people working adds to the public coffers in the form of taxes too.
But fourthly, and here is the big turn around in recent years, employers (well, some of them anyway) are starting to recognise that they cannot afford to release the talents of their older staff. In total terms, we are heading for a skills shortage in the next decade or so as the baby boomers move into their 60s and 70s but there is not the equivalent cohort coming through at the younger end to replace them.
When the Default Retirement Age was abolished a couple of years ago, there was much grinding of teeth amongst some employers organisations who argued that they would be overwhelmed with tribunals forced on them by aggrieved employees that they wanted to retire. That hasn’t materialised – not least because the legislation was not actually that draconian: employers aren’t obliged to keep people on who want to remain, they simply have to be prepared to consider their case.
In fact, there are now plenty of employers now actively encouraging older personnel to remain – either because they can’t get equivalent replacements or because they recognise the people skills and experience they offer.
So the stars appear to be aligning… but there is still a way to go.
And the “end goal” as far as the Government, employers and older people themselves are (or should be) concerned is flexible working.
The fact is, not every older person wants or is physically able to keep doing a full week’s work. They may well have caring responsibilities, either for their grandchildren or even their own parents. Old age doesn’t come alone, and by our 50s and 60s, many of us are quite pleased to come off the pace a bit.
So how might this flexible working actually, well, work?
One of the most interesting pieces of research in recent years has been the “mid life career review” run by NIACE (the National Institute of Adult Continuing Education). The premise behind it is that employers and employees actually sit down together at a sensible point in a person’s career and map out where they might want to go from here… and see how that fits in with the employer’s strategy.
The options that might work best for both parties could be fewer working hours, a switch in roles, or simply to carry on just as things are. The point is, that a sensible conversation is held where – all too often at present – neither side will broach the topic for fear of where it might lead.
The Mid Career Review is a great concept whose time is about to come, I suggest, and along with it something else needs to be considered: the financial retirement plans of the employee.
You can’t make fully-informed decisions about when to retire, or how many hours you might want to work going forwards without knowing just what your finances in retirement are going to be… and that will also lead onto helping make other key decisions: how much more you need to start tucking away; whether you should be considering a downsize;just how much can you afford to support your children through Uni; should you be taking steps to ensure that any future inheritance from your parents aren’t eaten up in care fees?
The list goes on. And of course the one way to find out all of these answers is to use the RetireEasy Life Plan (www.retireeasy.co.uk). A few clicks and you can find out the impact of whatever life might throw at you.
But here’s another thought: what about those people who still want or need to carry on working, but find that their employer no longer needs their skills set? It’s no surprise that the last decade has seen a boom in older people setting up their own businesses. No, it may not feel so secure, but it does offer flexibility and you get to put all the life and business skills built up over a lifetime to good use too.
For those who need to combine earning a living with caring responsibilities, it’s the perfect marriage.
The rise and rise of the “Seniorpreneur” is a phenomenon that is being noted in most developed countries around the world and, in countries like ours, there are plenty of organisations that will support them – notably www.prime.org.uk
In 1975, just 8.7% of us were self employed. By 2008 it had reached 13% and now stands at 15%: 4.6 million people are now working for themselves. Napoleon famously described Britain as a nation of shopkeepers. If he were around today, he would have to change that to “a nation of small business people”.