Sod early retirement.

Why taking early retirement is neither good for you nor society.

By: Martin Thomas

It used to be the middle-class dream. Retire in your mid-50s with sufficient money to spend the latter decades of your life enjoying the pleasures of the golf course, regular exotic holidays and maybe a little charity work to keep the brain ticking over. And you could also justify your decision that your departure from the workplace was freeing-up space for the next generation.

That was then: today’s reality is somewhat different.  The erosion of generous financial salary pension schemes has removed the financial security blanket that accompanied many of these early retirement plans.  People in their mid-50s are also likely to be facing the twin financial pressures of helping children onto the property ladder and supporting the care needs of elderly relatives.  That holiday of a lifetime might have to be put on hold.  Downsizing to a smaller property, to fund your new life of leisure, remains an option, although any capital that is accumulated may not be enough to cover your later years.

Retiring from work can be even worse for our physical health.  A German study has shown that whereas retiring from poor jobs with low earnings or hazardous work conditions tends to be health-improving – no surprises there – retiring from good jobs with high earnings and more prestigious occupations is associated with adverse health effects.  In other words, if you loved your job and then lost your sense of purpose upon retiring, it is not likely to be good for your overall health.

Without the discipline of the working day it is all too easy to slip into bad habits.  That second bottle of claret on a Tuesday doesn’t sound so excessive if you don’t have to get up for work in the morning.  Boredom and alcohol problems appear to be common companions.  According to a survey by Drink Wise, Age Well, 1 in 3 adults, aged over 65 with an alcohol problem, developed this in later life and ‘loss of purpose’ was one of the primary reasons given for drinking more.  If you need support in overcoming alcohol and drug addiction speak to your GP or check-out Rehab4addiction.

Nearly 20% of the UK population is 65+ and yet only 10% are in remunerated employment. Meanwhile, those in their early retirement years are the most likely to offer to do good works for free in their community – some 40% in this segment volunteer at least occasionally.   According to leading analyst, James Murphy, who has studied extensively the socio-economic aspects of ageing, ‘This is seriously skew-whiff.  With the Government deficit running at  –  possibly, according to IFS  –  a mammoth 15% of GDP in 2021, our grey citizens will be invited (with ever rising political clamour) to bin the slippers, stop prison-visiting (whatever!) and make the labour market their home again. Soon, we can expect an official national campaign (Messaging : Keep fit. Earn. Pay tax. Be a hero!) to get 50% of all over-65s into paid work before the decade is over. For the Chancellor will want to see those new tax receipts sweat and swell  –   as all the over-65s get busy and, where necessary, get down from their dignity to price themselves into jobs.

‘After all, with HMG finances in something of an ICU for the foreseeable, it is unimaginable that tax raids on savings and assets will not be made. And the generosity  –  perhaps not the right word  –  of Triple Lock indexation of state pensions is unlikely to survive.  Retirement is, in many senses, an extinction.’

The good news is that the spirit of entrepreneurialism among the 50 + audience is strong.   They are responsible for setting up businesses faster than any other age group, employ nearly 10 million people (almost 2 million more than the under-50s) contribute more than £119bn to the UK economy every year.  2.2 million over-50s have set up their own businesses or invested in another, while a further 1.6 million (6 per cent) are planning to do so.

So set aside the slippers. Ignore the siren call of that second bottle of wine (or ideally the first) and get back into the workplace.  Start your own business.  Investigate what additional skills you might be able to develop.  Retirement is likely to be a long game. Don’t start it too soon.