The way that people view work is something that continually changes, especially as different generations move their way through career paths.
As a new generation braces for its twilight years, there is a growing consideration of how best to handle the winding down of work.
Rather than abruptly retiring on a fixed day, many are electing to phase their way into retirement, but it is vital that your investment and pension planning reflects this approach.
What are the advantages of a phased retirement?
Given the increase in life expectancy, the prospect of spending decades in retirement can be a daunting prospect.
For many people, work forms an integral part of their identity, as it provides stability and structure to their lives.
The social component of work can often be challenging to replace.
As such, people are increasingly choosing to phase into retirement by reducing their working hours or responsibilities to ensure they avoid stress and burnout.
It may also be possible to turn to freelance or consultancy work, if you have built up knowledge in your profession that is of value to those with less experience.
The main aim of phased retirement is to embrace a more flexible approach to work so that you can begin living the life you want, while still having a steady income and stability.
What are the financial implications of phased retirement?
By having an income to supplement your pension, you can ensure that your savings last for longer than they otherwise would.
In some cases of phased retirement, it is possible to forgo collecting your pension immediately, instead living off the income you are able to accrue through part-time or freelance work.
Where you do elect to draw from your pension, you should be aware that you might end up in a higher tax bracket due to your combined income.
You should seek professional advice to understand the unique financial implications of your approach to phased retirement.
To get the most out of phased retirement, speak to our team today.
