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Should You Continue To Work Into Retirement?

By: Garry Crystal - Updated: 17 Mar 2012 | comments*Discuss
Working Into Retirement State Pension

Lack of income can often mean that working into retirement is the only option for some people. But there are benefits to consider when it comes to deciding whether or not to continue working.

Working Considerations

Although the national state retirement age in the UK has been increased to age 65 for both men and women, it is possible for people to retire earlier or later than this. Finances are not the only consideration for those approaching retirement age. Anxiety over what to do with the large amount of free time that comes with retirement can be a concern for some, while losing an important social network maintained through employment can also be a worry.

Health Benefits

There is significant medical evidence to suggest that working into retirement does have mental and physical benefits. Keeping active through work leads to good mental health, which also has the knock-on effect of reducing stress and ill health. Status is important to some people and work can have the effect of boosting a person’s self esteem. On the other hand, many people would love to retire from jobs they have been in for decades. Staying on in work for purely financial reasons can decrease motivation and can actually lead to depression.

Working Part Time

Those who have to work during retirement for financial reasons should consider working in a new job on a part-time basis. The saying ‘a change is as good as a rest’ applies equally to employment. Retirement can be the chance to try a completely new job that will help to keep the mind and body active, while topping up a pension, too. Working part time also means there will still be plenty of free time, which can lead to a new social network. Consider a job that you would find enjoyable, or even starting up a small part-time business.

Extra Time To Clear Debts

Working a year or two into retirement can make a big financial difference. The extra couple of years' salary could go towards clearing off debts that would eat into a pension. Credit cards, loans and other credit agreements could be decreased or cleared by using the salary from an extra year of employment. This will mean that retirement can be debt free, something which is not possible for everyone. Many people do have to work longer into retirement simply because the debts they have would take a large chunk out of a pension. Even if a debt-free retirement is not achievable, working for an extra year can help to significantly decrease debt payments.

Working Longer For A Larger Pension

Those who are considering working past the retirement age can defer their state pension. This means that when the time comes to claim the state pension, the payments will be larger. Working for at least five years past the state retirement age should mean that weekly state pension payments are increased by around 50%. This will make a significant difference to pension funds. With people living longer it does make sense to have as much income as possible during retirement.

Positive Reasons For Working Into Retirement

For those who are unsure about working later in life, here are the key points to consider:

  • Work does not need to be full time; part time may be enough to boost pensions.
  • Continuing to work in later life will mean staying mentally fit and physically active.
  • Working will help to maintain social contacts with work colleagues and friends.
  • Larger weekly payments can be gained from working later and deferring a state pension.
  • Additional income in later life will help towards beating inflation and the rising cost of living.
  • Considering a new type of employment can open up a world of new business and social opportunities.
  • Working longer in the same job means occupational pensions can be topped up. With the new government retirement age this may be the only option for some.
There are many positive points to working into later life. Those approaching retirement age should consider all of the benefits, and not just the financial rewards.

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I thought that this article by Garry Crystal covered aspects of working beyond current retirement dates, that are not the obvoius reasons why people defer retirement, mainly the financial rewards. The social contacts are an important consideration, after all you may have been in the same work enviroment with the same colleagues for a number of years, and it is possible that this represents the vast majority of your social contacts. Worth perhaps greater consideration in the decision to continue work.
JAY - 17-Mar-12 @ 3:58 PM
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