Modern society is challenging the traditional perception of women winding down and spending less time at work and more time on hobbies and relaxing when they reach their 50s and 60s.
Instead, we are now seeing more women in this age range starting a new chapter in their working lives. Research shows the employment rate for women aged between 50 and 64 had risen to 68% in 2019, up from 53% in 20001.
Perhaps many women will be working out of necessity, impacted from the gender pensions gap and changes to the State Pension age. Some women may not have saved enough for their retirement or will have faced a change of circumstances that means they can’t afford to stop working when they had originally planned.
Whether work is a result of choice or necessity, the growing number of older women remaining in the workplace has many distinct advantages.
Providing financial resilience and independence
Some women may relish the opportunity to start something new whilst others will continue to enjoy the career they have been in for years and see no reason to stop. With the mortgage paid off and childcare bills consigned to history, many older women may find that the financial pressure is off and that they can afford to do something they enjoy – or just have the time to focus more on their career. It might be the perfect time to monetize a hobby or start a new business venture. Alternatively, there is the opportunity to retrain and do something entirely different.
Continuing to earn gives women more financial resilience and independence, and that surely can’t be a bad thing? With life expectancy continuing to rise – a 65-year-old woman is now expected to live for a further 21 years2 – there’s a lot to be said for keeping the money coming in as long as you can.
More time to pay into a pension
The longer you work, the more time you have to pay into a pension and the longer you wait to access your pension savings, the more time they have to grow.. When you do eventually start taking your pension, your savings won’t need to last as long either. You may also find it makes sense to defer your State Pension in return for a higher income later on.
But there are other benefits beyond financial, too. Those who can carry on working often find that the right job – and the social outlet it provides – improves both their physical and their emotional wellbeing.
Why are we seeing this trend?
Since the default retirement age of 65 was scrapped in 2011, women – and men – can stay in employment as long as they are able to 1, as has always been the case for the self-employed.
Employers have to be more flexible and this, coupled with the pension freedoms (which relaxed the rules around taking income from our retirement savings), means that now more than ever retirement doesn’t have to be an abrupt halt, where you are working one day and retired the next. Instead it’s possible to ‘glide’ into retirement, gradually and on your own terms, possibly only taking income from a pension as your needs change.
Reconsider retirement planning
This new chapter is an exciting time to reboot a career, take on a new role, retrain or set up a new venture. It’s also an opportunity to reconsider retirement planning.
A financial adviser will be able to work out the likely retirement income in an existing retirement plan and if things were to change in the next chapter. It’s important to look at current owned assets including property, ISAs and premium bonds and asses whether enough National Insurance Contributions have been paid to be able to claim a full State Pension. And the value of a business should be taken into account if you are self-employed.
Once all this has been taken into account a financial advisor can assess whether you’re on course for the income you will need when you do eventually slow down, and if necessary, be able to offer advice on how to plug any gaps. With a full analysis of your financial position, the picture is often better than you imagine.
Meanwhile, if your change of direction is going to give your finances a welcome boost, your adviser can help you put that money to the best use and boost your financial wellbeing, both now and when you do eventually retire.
1 Office for National Statistics, LFS: Employment rate: UK: Female: Aged 50-64: %: SA, April 2021
2 Office for National Statistics, National life tables – life expectancy in the UK: 2017 to 2019
Sharon Bonfield writes a monthly column focusing on retirement planning for women, see our finance channel.Last modified: September 2, 2021