text: Why delaying your retirement may benefit you - Investment Sense
  According to a 2020 study by insurance provider Aviva, more than half of Brits worry about the quality of life they can expect in retirement. This is an understandable concern, as this stage of life has traditionally been seen as a time to relax and live the lifestyle you choose.
  If you want to ensure that you have enough wealth to support your desired lifestyle in retirement, one effective solution might be to temporarily delay it. While this suggestion may raise a few eyebrows, as few people want to trade free time for work, it can be surprisingly useful – read on to find out why.
  Delaying your retirement means that your pension will need to support you for less time
  Since 2015, people have had increased control over their retirement due to the introduction of Pension Freedoms. While initially the government allowed you to access your pension from the age of 55, this age is set to rise to 57 by 2028.
  If you're nearing this age, it may be tempting to retire as soon as you can, but this isn't always the most sensible idea.
  For a start, the sooner you retire the longer your pension will need to last. According to figures from the Office for National Statistics, the average man can expect to live to around 79 while the average woman can expect to live to around 83.
  It's also important to bear in mind that these figures are only the average and if you lead a healthy lifestyle then you may expect to live even longer.
  This means that if you retire as soon as you are able to, your pension will probably have to last you for at least two decades. This can be a long time, especially if you plan to spend your retirement doing expensive activities, such as foreign travel.
  Delaying your retirement by several years will reduce the amount of time that your pension will have to sustain your preferred lifestyle, making it much more likely to be able to support you sustainably.
  Delaying retirement gives you longer to save
  In the same vein, delaying your retirement will also give you more time to save money into your pension. This can also enable you to take advantage of tax relief for longer, boosting the size of your pot.
  Whenever you make a pension contribution, the government tops it up with an extra 20% tax relief, making it an efficient way to save for retirement. Furthermore, higher- and additional-rate taxpayers can claim a further 20% and 25%, respectively.
  You can receive tax relief on your contributions up to £40,000 per year or your Net Relevant Earnings (whichever is lower).
  Furthermore, if you're employed then you'll also receive employer pension contributions on top of your own, which can be a nice boost for your savings.
  Since 2008, every employee in the UK is automatically enrolled into a workplace pension, unless you specifically opt out. In this scheme, you typically pay 5% of your salary into your pension and this is then topped up by an additional 3% contribution from your employer.
  Deferring your State Pension can make it larger
  If you decide to delay your retirement, you may also want to defer your State Pension too. While this may not be as large as your private pension, it can provide a useful bedrock of income when you retire.
  The current State Pension Age is 66, although this is due to rise to 67 in 2028. The full amount that you may be eligible for is £179.60 per week, although this is dependent on your National Insurance record. To qualify for the full amount, you will need 35 years of National Insurance contributions.
  If you decide to delay your State Pension, it will rise by 1% for every nine weeks that you defer it, which works out at around 5.8% for every year that you put it off.
  If you want to know more about your State Pension, you can use the government website to find out how much you are eligible for, when you can get it, and how you can increase it.
  Working for longer can improve your emotional wellbeing
  Another benefit of delaying retirement, which isn't often talked about, is that, for many people, working provides an opportunity to be social and can boost your mental wellbeing.
  If you have worked at a company for some time, you may have friends there whom you've known for many years. Once you retire, you may not have as many opportunities to socialise with them as you did while you were working.
  One solution to this is to consider a phased retirement, where you can work reduced hours or in a consultancy role. This will allow you to get the best of both worlds, enjoying more free time while also spending time with old colleagues and relieving some of the pressure on your pension.
  If you're considering delaying your retirement but aren't sure whether it's the right decision for you, get in touch. Please email info@investmentsense.co.uk or call 0115 933 8433.
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