If your clients are approaching retirement age, in front of them lies a hugely significant crossroads. They could opt to retire completely and put their time into non-work endeavours, or they could gradually ease into retirement while maintaining some employment in the coming years.
At first glance, the solution might seem obvious: your clients have worked hard all their lives, and deserve to retire completely.
However, according to FTAdviser, 70% of Brits “cannot see themselves being able to take an early retirement”. Indeed, the current economic climate has caused many people to reconsider their early retirement plans.
Although your clients might be able to afford to comfortably retire early, they may still have doubts about the economic uncertainty the next few years could hold. In this case, it could be argued that a hard and fast retirement may not be the best option for your clients – even if it’s what they had originally planned for.
Luckily, there is a viable alternative to stopping altogether: your clients could explore “flexi-retirement” options that allow them to keep working, but on their own terms.
Read on to find out the key benefits of easing into retirement for your clients, and how adjusting their financial plans to suit the changing climate could be hugely beneficial.
“Flexi-retirement” could benefit your clients financially
A “flexi-retirement” model could be a great solution for clients who want to slow down while still pursuing work opportunities.
For example, a flexible retirement might involve cutting down to part-time, or working in a consultancy role rather than continuing with major responsibilities.
In the case of your business owner clients, it could even mean moving into an advisory position on the board, handing over the reins to their successor entirely.
Here are three ways your clients might reap the rewards of a flexible working model in retirement.
1. Flexi-retirement could give your clients peace of mind during uncertain times
A study published by Professional Adviser states that, of those retiring in 2022, two-thirds say they plan to stay in some form of employment.
Although this might sound a surprisingly high figure, the Office for National Statistics (ONS) reports that UK inflation reached 9% inflation in May 2022. This exemplifies a 40-year high in the cost of living.
Understandably, these conditions mean clients who had planned to retire early could need to re-examine this year.
By shifting to a flexi-retirement model, your clients could keep bringing in an income, while still being able to enjoy some of the benefits retirement has to offer too.
For example, your clients could travel, spend time with grandchildren, or volunteer with an organisation of their choice. Plus, at the same time, they could also keep a steady income stream and live comfortably during a time of economic uncertainty.
2. Your clients could continue to enjoy their lifestyle while maintaining a sustainable retirement income
A Financial Times poll suggests that 10 million pensioners are at risk of running out of money.
If they have accumulated a significant amount of wealth during their career, your client may have become accustomed to a certain type of lifestyle. So, when a client takes their pension, they need to consider whether they can continue to afford this lifestyle while drawing a sustainable later-life income.
It may be the case that, in order to continue living the life they love, your clients could benefit from remaining in some form of work when they reach retirement age. It could be that your clients can afford to reduce their hours significantly, enabling them to enjoy their well-earned rest from full-time work without giving up completely.
Working with a financial planner can be instrumental here, as they can use cashflow modelling to review your clients’ wealth at this stage in their lives. A cashflow model can give your clients a visual image of their current financial situation, and where they’ll be in different scenarios.
Having this information can help your clients determine how much they need to retire comfortably, and how a flexible retirement could help.
3. Clients could continue to support loved ones during retirement
If your clients are supporting loved ones as they enter retirement, this could place a further weight on their financial responsibilities.
Indeed, a MoneyAge report claims that one-third of new retirees still have dependants, costing an average of £3,700 a year. This could be through things such as:
- Paying school or university fees for children
- Helping adult kids onto the property ladder
- Supporting elderly parents in later-life care.
So, by continuing to work part-time during their early retirement, your clients’ families could benefit, too. Your clients could be able to provide amazing opportunities or support to those they love most, while remaining financially viable on a personal level.
Your clients’ mental health could be improved by continuing to work in retirement
While your clients deserve to stop work completely if they feel it’s the right time, some might not have considered the mental impact of suddenly grinding to a halt.
If your clients have worked in high-pressured environments for decades, it could be that waking up in the morning and having no “driving force” can be overwhelming.
Indeed, research shows that retirement can have a negative impact on a person’s mental health, whereas staying busy and continuing to work, perhaps at a less intense pace, can be beneficial.
A study published in Public Health Reviews states that, of 10 case studies conducted, none showed negative effects of working beyond retirement age on mental health.
What’s more, four of these demonstrated that continuing to work showed a “statistically significant positive effect” on mental health.
While your clients could be looking forward to a well-earned break from the stressors of a full-time job, losing the structure and social contact of work entirely could be complicated. It might be that your clients feel at sea, and may lose motivation to continue pursuing their passions.
Instead, a flexi-working model could be advantageous. If your clients are able to consult on or teach the skills they have learned in their career, for example, this could help keep them motivated and passionate, while also affording them more time to relax.
Get in touch
If your clients are re-evaluating an early retirement, or need advice on drawing a sustainable later-life income, get in touch.
A Henwood Court financial planner can help your clients achieve their dream life, and act as a guide throughout the cost of living crisis and beyond.
Email email@example.com or call 0121 313 1370 to find out more today.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
Workplace pensions are regulated by The Pension Regulator.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.