Don’t retire – work for five more years if you can to boost your pension fund by £50,000, says financial research.
Providing you still enjoy good health, staying in a job and stashing the extra cash can really make a difference to the money you have to spend in retirement.
To show how much, life and pensions firm Aegon has crunched the numbers for a 65-year-old continuing to work until the age of 70.
If a 65-year-old had saved £355 a month into their pension, they should expect a fund of £105,496 by retirement that would give a monthly pension of £457 if converted to an annuity.
But had they stayed in work and earning for three years, this would rise to a pot of £131,308 – an increase of £25,342 adding £164 a month to their pension calculated on an investment return of 4%.
Life expectancy is increasing
Going the whole five years improves their retirement finances by even more. The pot would grow to £151,884 giving a pension of £771 a month.
“Working for longer makes sound financial sense providing you are still in good health and can manage those extra years,” said a spokesman for the firm.
“Life expectancy is rising and still leaves plenty of time for relaxing and enjoying your time and money. New laws stop employers sacking older workers, so if you can, do it.”
More people over 65 are staying in work, according to official figures.
The employment rate increased by 200% from 4.9% to 10.2% between 1985 and 2015.
65 years old isn’t past it any more
The trend of working longer is expected to rise as the state pension age increases – to 66-years-old by October 2020.
“Even working for one or two years extra can make a significant difference,” said Ros Altmann, a former pensions minister.
“If you are able to, your lifetime income will be higher, you will have more money to spend both now and in the future and the economy benefits.
“It used to be the case that people aged 60 or 65 were past it but these days people are simply not old like they used to be, so why should they write themselves off?