Boost Retirement Income
If you live in the UK, it won’t have passed you by that post covid, many folk in their 50’s and 60’s have decided now is the moment to jump ship so to speak and retire from the world of full time work. Clearly the experience of lockdowns and maybe the government’s furlough scheme, gave them a glimpse of life after work and for many they liked what this new experience and pace of life gave them! But many are finding themselves in a position where they need to boost their retirement income for various reasons.
Fund the Gap!
As a result, an unprecedented number of older workers have chosen to retire early, in many cases taking advantage of recent pension reforms and particularly the move from final salary to defined contribution schemes. These critical changes to the way people save through their working lives allow for pension withdrawals from the age of 55, a lot earlier than was normal in years gone by. As a consequence, this new way of saving for our retirement, has provided an opportunity for those in their 50’s to fund the gap up to state pension age, which currently pays out from your 66th birthday.
While this all sounds rather wonderful, with contributory schemes providing an opportunity to jump ship much sooner than we had thought was possible, there are risks which can come and bite you and these can be catastrophic – as mentioned in previous blogs, the main issue with this tactic, is its sustainability and the reliance on stock market growth to maintain a healthy pot through this period and the risks of market volatility and inflation.
Sustaining your pension fund
So let’s say, like me, you’ve chosen to draw down on your pension fund the gap between your desired retirement age and the date you are eligible for a state pension. So unfortunately, as mentioned above, sustaining your pension fund relies on a stable stock market and reasonable levels of inflation.
The UK, like many other parts of the world, has been negatively impacted by factors such as the Ukraine war, unstable global supply chains and the covid pandemic, leading to a perfect storm of unstable stock markets and soaring prices. Therefore, for us early retirees, this has led to a pretty serious situation with an average of 20% wiped of the markets and prices increasing at rates not seen since the economic downturn of the late 1980’s. As I’ve discussed elsewhere, in this situation the prudent thing to do is to scale back on your spending and maybe draw on cash reserves, rather than drawing down from an already depleted pension fund. Finding ways to boost your retirement income may become a requirement in these situations.
What I’ve done to boost my retirement income
As I say, this is a reality for me, in recent months I’ve experienced a sharp fall in my investments and face the prospect of a fund that simply won’t recover (the maths of which I’ll leave for a future post) if I ignore these realities and continue blindly withdrawing from a depleted fund. So as a consequence, I’ve decided to do two things – I’ve reduced my drawing by about 50% to a level that barely covers my fixed costs and at the same time decided to boost my retirement income by seeking part-time work to help fill the gap and provide a supplemental income to cover the “nice to have’s” in my life…
I’ll admit that while the idea of returning to work didn’t fill me full of joy and happiness so soon after retirement, I recognised that these unprecedented times, require some lateral or tactical thinking and action and maybe even a bit of sacrifice. As it happens, for me, it wasn’t such a tough decision, as a local company I knew well, were looking for someone to work part-time doing surveys and quotes for their air conditioning business. I was familiar with the work and felt I could contribute, and so accepted and transitioned fairly seamlessly from retirement back into the world of part time work…
How I’ve done it
It made sense for both myself and the company, that I offered my services on a self-employed basis – this gave both of us the flexibility we were looking for – for them, they didn’t need the admin overhead of another employee and all that entailed and for me, it meant I could organise my time and financial affairs to best suit my own circumstances – a win, win! So, I’ve found myself working about 1-2 days a week generating enough income to fill the gap and in so doing taking the pressure off my depleted pension fund and providing a way of facilitating recovery once the markets bounce back…
Are there jobs for my age group?
If you listen to the media, you’ll find there’s a debate raging about how the government and, indeed firms and companies themselves, tempt folk like us back into the workplace… Indeed, in the UK there is a drastic shortage of suitable individuals to fill vacancies across all age groups and so as a consequence, the absent 50’s and 60’s are being targeted in recruitment and retention drives.
There is a growing recognition that older workers provide great value, we bring maturity, experience and maybe even wisdom into the workplace and because we are in a different stage of our lives economically, aren’t demanding such high wages or the commitments younger workers might. As a consequence, older workers are an attractive option for employers, and you might well find it easier than you think to find the perfect part-time role providing the flexibility most of us are looking for. So the conditions are in your favour, you’re in demand, with many opportunities, one of which I’m sure will meet your needs.
So if you’re concerned about the sustainability of your pension fund during these tough times, now might be the perfect time to explore the opportunities and benefits of returning to work on a part-time basis. You may also find, as I have done, that there are positives other than the obvious financial ones, of returning to work on your terms – working, even on a part-time basis, can provide purpose and structure which, for many folk in retirement, might be missing. In fact, you might find it’s exactly what you need to take you through the next period of your life!!
