In previous generations, life typically had three stages: education, work, and retirement.
Now, changes to the employment environment, rules around drawing pensions, and longer life expectancy mean that you are likely to have a vastly different retirement experience to your parents and grandparents.
A major new report from Aegon has looked at the concept of the “second 50” – essentially the years between age 50 and 100 – to highlight how different your “second 50” is likely to be to previous generations. Read on to find out more.
A “multi-stage” life
Rather than heading into work straight from education, and working until you retire, it’s likely that you will enjoy what Aegon call a “multi-stage life”. This may involve:
- Multiple careers
- Many different periods of learning and retraining
- Gaps in employment (for example, for travelling or for caring responsibilities)
- A longer period of transition from work to retirement.
The “second 50” represents a new phase of life that will likely be very different to previous generations. You may find yourself living through many different circumstances at various times and in different orders, meaning a flexible financial plan is increasingly important.
5 ways your “second 50” will likely be different – and how you need to plan
The Aegon research found just a quarter of people (27%) expect a “hard stop” retirement. This opens up the possibility of a longer and more flexible working life rather than simply stopping work on a Friday and waking up Monday as a retired person.
Working in later life is increasingly seen as a positive step, offering a way to keep your mind and brain active and to retain important social contact. Perhaps surprisingly, Aegon found that almost 3 in 5 people (57%) wanted to carry on working as they enjoyed it.
A phased retirement – where you reduce your working hours or responsibilities – is increasingly popular. You may also want to set up your own business, perhaps using your skills and experience in a teaching or consultancy environment, or turning a passion into a going concern.
According to Aegon, increases in life expectancy mean that people reaching the age of 50 in the UK today have an average of 36 years ahead of them. And, babies born today have a 1 in 4 chance of reaching the age of 100.
So, it’s likely you’ll spend many more years than your parents or grandparents out of work. If you live until 90 or 100, you may spend fewer years of your life working than not!
However, while you may live longer, research from University College London has found that people in their 40s and 50s are likely to suffer more years of ill health than older generations now in their 60s and early 70s.
So, your “second 50” might involve more periods of ill health. Aegon found that 82% of people were somewhat or very concerned about their health in old age, but just 25% had made any provision for social care expenses in their financial plan.
Living longer means thinking about how you will fund potentially decades of retirement.
According to a government paper, in 1948, when the modern State Pension was introduced, a 65-year-old could expect to live for a further 13.5 years. This had risen to around 21 years by 2007.
One of the most common questions clients ask us is: “Will I run out of money in retirement?”
As your “second 50” is likely to feature multiple stages, a flexible financial plan focused on your goals can help you to ensure you can maintain your desired lifestyle at each stage of life.
Pension Freedoms legislation gave you far more flexibility when it comes to drawing a pension, allowing you to switch the payments on or off as your circumstances dictate. And, with the State Pension Age set to rise, carefully managing your wealth to sustain you through retirement is ever-more important.
If you’re moving into your “second 50” you could conceivably be supporting two additional generations.
Adult children may be in education or living at home for longer due to high housing costs, and you may want to provide support to them through university or by providing money towards their first home.
Additionally, you may also be providing care or support to elderly relatives. This may result in a reduced income, or increased expenses.
If you also consider the increase in blended families, this can result in added complexity when it comes to organising your finances.
Navigating issues surrounding your family’s needs as you enter your “second 50” is likely to be a key concern.
What brings you joy and purpose?
The answer to this question will be different for everyone, but it will inform your financial plan.
Having some firm ideas of what you’d like your “second 50” to look like can give you concrete goals to work towards.
Get in touch
If you are entering, or already in your “second 50” and you’d benefit from a flexible financial plan focused on your life goals – whatever they are – then please get in touch to find out how we can help.
Email firstname.lastname@example.org or call us on 01454 416653.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.