Five reasons not to retire

Retirement sign

Although many people have little option but to work longer, others may do so to boost their retirement options at a later date. Either way, there are built-in financial pay-offs for retiring later.

1. Earnings

You can carry on earning an income, protecting your savings and giving your capital more time to grow. The state pension is more generous for people who defer taking it, paying an extra 10.4% for every full year of deferral.

2. Improved annuity rates

Annuity rates tend to improve for people who retire later. For example, a £100,000 pension fund would currently buy a level annuity income of £5,563 for a healthy man aged 65, but if he bought it aged 70 it would be worth £6,368.  

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3. Medical conditions

Older retirees are more likely to have developed a medical condition that means they qualify for an enhanced annuity which pay higher rates than conventional annuities.

4. Part-time role

Working into retirement doesn't mean you have to stick with the 9-5. "More and more people will see the benefit of moving to part-time work rather than retirement, or will choose to 'monetise a hobby', taking part of their savings to plug the gap that less work leaves," predicts David Millar, corporate benefits marketing manager at pension provider Friends Life.

He suggests several ways of boosting reduced earnings, including income drawdown, using part of your pension to buy an annuity and leaving the rest invested, using ISA savings, or using one pension and leaving another to grow.

5. Healthy mind, healthy body

Working in retirement isn't just about boosting your income. Research from Prudential revealed that 55% of people planning to retire this year would like to extend their career to keep their mind and body healthy.

Published: 05 September 2013
Last updated: 09 June 2014

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