Lack of finances are forcing Brits to work for longer
Both men and women are retiring later as lack of finances forces people to work for longer.
On average, men retired at 64.5 in 2009, an increase from 63.8 in 2004, and for women the average age was 62, up from 61.2, a report from the Office for National Statistics (ONS) shows.
The report also found increasing numbers of people are now working above their state pension age, although mainly in part-time positions.
Part-time working pensioners increasing
Between April and June last year, 59% of male pensioners were working part-time compared to 68% of women.
The number of working men aged 65 or over rose from 10.7% in 2008 to 11.7% in 2011 while the number of women working beyond the state retirement age increased to 13.5%, from 12.3%, during the same time period.
Sarah Levy, head of ONS pensions analysis unit, says: "This indicator of average age of withdrawal from the labour market will be important to watch in coming years as the state pension age rises".
The state pension age will rise for both men and women to 66 in 2020, and further rises are expected after this.
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How to boost your pension
Most people's pensions have been savaged in the last few years, and the big question is what to do about the shortfall. Here's some tips:
Finding additional money
There is no upper limit on contributions in the final year before you retire, so it's worth putting through other savings and investments as pension contributions, so that you get tax relief on them. However, it's not easy going into retirement without any savings you can access so make sure you leave some aside for extras such as holidays.
Don't ignore ISAs
A balance between your pensions and ISAs is important as they are a lot more flexible. ISAs also have a further tax benefit once you're retired, as the money you take from them is completely tax-free. In April, the limit will be extended again to £10,680 (out of that £5,340 can be put into a cash ISA) so it's worth putting away as much as you can so you can use your ISA as an untaxed income on retirement.
Maximise your state pension
If you want a full state pension, make sure there are no gaps in your national insurance contributions record, which may occur if you've worked abroad, were unemployed or on low earnings for a while. To check your contributions contact the Department for Works and Pensions directly on 0845 915 5996 or go to dwp.gov.uk.
Another option is deferring your pension - by deferring a year you can claim an extra percentage on top and you can take this as an extra weekly pension for the rest of your life or as a single lump sum.
What if I don't have enough saved?
Despite all your investment efforts your retirement income could be too small to make ends meet comfortably. One option is to trim those ends, the other is to continue working, an increasingly common option, and although this might not be the desired choice, it means your pension fund will continue to grow. If you own your own property, another option could be to downsize to free up some extra cash.
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.