Phased approach to retirement becomes more popular More than three million people have started ‘phasing’ into their retirement by cutting back on working hours and job responsibilities. The study by L&G found 3.3 million pre-retirees, aged 55 or over, have made a decisive move into semi-retirement. It means around a third of the older workforce is intentionally phasing into retirement. 48% of older employees surveyed said they expect a phased approach to retirement instead of entirely stopping work. According to L&G, this phased approach to retirement will lead to a reduction in income but buying a fixed-term annuity could help to bridge the gap. Findings of the study, support recent evidence that a growing number of workers are delaying full retirement due to rising living costs. While there seems to be a growing desire for a phased approach to retirement, one in 10 people surveyed, who have started this phasing process, do expect to have to increase their workload again. 40% of people expecting to retire in the next five years are concerned that the cost-of-living crisis will make this plan unaffordable. L&G says its survey also suggests that, for many, retirement is “no longer a line in the sand.” 48% of those over 55s in employment expected to reduce their working hours instead of fully retiring, and 14% plan to slow down in the next year. While many want to take a phased approach to retirement, L&G said 44% are taking this decision because they cannot afford to retire fully. Lorna Shah, managing director of retail retirement at Legal & General Retail, said: “The number of pre-retirees considering a gradual or phased move into full retirement shows how much the perception of later life has changed in recent years. However, as people choose to approach retirement, it’s important they see it as something that should be actively managed, and not something they already feel they are ‘in’ or have ‘done’. “For those wanting to keep their options open, while also looking for ways to supplement their income, flexible products such as fixed-term annuities can play an important role. They provide a guaranteed income for a set time –in some cases as little as three years, helping to bridge any potential gap in salary.” Forward wealth planning is particularly important as you want to be prepared for your life’s many transitions, some of which could be catastrophic such as the death of a loved one. One of life’s biggest transitions is retirement, and I would suggest the five years before your retirement and the five years after you retire are the most crucial. There’s a lot of change and upheaval at this point in your life. This is particularly true for someone who’s selling their business to retire. Suddenly, they go from being a busy entrepreneur to someone who has a lot of time on their hands. It’s one of life’s transitions that need to be planned and prepared for carefully. Having a wealth plan in place will bring clarity, contentment, and certainty to your financial life; being able to visualise what your financial future could look like, being less anxious about tomorrow, and knowing you can secure all that you value. That’s what comprehensive planning aims to deliver. I hope you find this blog useful as you prepare for the New Year, a time to reflect and consider ways to improve oneself as the new year begins. If you have any questions or wish to speak to a member of the Wells Gibson team, please do not hesitate to contact us.