Baby boomers reinventing retirement

Retirement means different things to the ‘baby boomers’ now reaching retirement than it did to their parents - if the findings of Aviva’s most recent Real Retirement Report are anything to go by.

This reveals that 39% of people over the age of 55 will work part time during retirement, and that 23% of 65-74 year olds were in paid employment of some kind in December 2012.

Changes in retirement age

This may be partly due to changes in the retirement age. Until recently there was a default retirement age – you retired at 65 and that was the end of the matter – but this was phased out from April 2011, and is now abolished.

This means that people can now work for as long as they like, although a compulsory retirement age can be set by individual companies if there are sound business reasons for doing so. Most businesses do not set a compulsory retirement age and should an employee choose to continue working longer they cannot be discriminated against on that basis.

Active and healthy

It seems that more people are remaining active and healthy well into what is traditionally regarded as the retirement years - probably due to improved health care and healthier lifestyles. As a result it seems that they are prepared to continue to work, to improve their economic situation for the future.

The Aviva report indicates that the number of 65-74 year olds still in work increased to 23% in December 2012€“ up from the 18% still in work in February 2010. There was also an increase in the 55-64 year old age bracket, where 55% were still in work in December last year, compared with 41% in February 2010.

Increased income

As a result, the typical over-55 now has an income of £1,444 each month along with £14,544 in savings (December 2012), compared with a monthly income of £1,239 and savings of £11,590 in February 2010.

What next for ‘baby boomers’?

Although 80% of those polled for the Aviva report said that they were concerned by the likely increase in the cost of living during the first half of 2013, they do not seem to be allowing that anxiety to prevent them from enjoying life to the full:

• 44% plan to travel more
• 42% will spend more time in their gardens
• 37% will spend more time with their families
• 33% will socialise more with friends

Lessons for retirement?

The findings are backed up by an earlier survey from Bank of America. Its Merrill Lynch Affluent Insights Quarterly from January 2011 reveals that 86% of affluent baby boomers intend to live a more active lifestyle than their parents did, while 70% planned to keep working, at least part-time.

The survey also offered a few hints on how to cope with retirement, including:

• Have a clear vision for how you want to live in retirement
• Know how to manage your retirement income to make sure it lasts
• Start planning for retirement in your 30s
• Remember to factor in things such as paying off debt and caring for aging parents