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Reconstructing retirement
Whether technology, work, health or anything else we may consider, it is likely to have changed beyond recognition over the past 50 years and this makes me wonder what retirement may look like for future generations.
One of the largest influences on retirement has and will continue to be policy. Since the 1980s the UK government has increasingly moved towards the US approach of self-reliance in retirement and away from the paternalistic policy logic of a welfare state. Some obvious examples include the new pension freedoms, abolition of a default retirement age, auto-enrolment, developments in financial products such as equity release and lending into retirement and access to free information through Pensionwise.
The message behind these policies is one of freedom and the control to make our own choices but it could also be interpreted as an attempt to shift the blame away from the state and onto the individual if they haven’t made the 'effort' to save enough.
Policy tends to assume individuals can or will make the right choices, and focuses on improving financial capability for those who don't know-how.
However, we all know that sometimes life happens and your prosperity in retirement could be just as much of a lottery than a well-executed plan. Research clearly shows the impact that social and structural issues have on your retirement - for example, what was your employment record and earnings like? Did you live through a recession and at what stage of life did this occur? Did you have children or large breaks in your career? Did your company give you a pension? Were you divorced or widowed?
This shift in policy attitude will see a growing inequality gap for those entering later life in the future which is on top of many other social issues such as rising debt levels, low interest and annuity rates and that people are generally saving less too.
Research from the British Household Panel Study and Understanding Society Study followed people 50-69 years from 1991 to 2015 entering retirement. It found nearly 1 in 4 returned to paid work and relatively quickly within 4-5 years of retiring and this is expected to increase.
Luckily for policymakers, technology has given us much greater flexibility and control in what we can do for work, where we work and how we work. Over the coming decades, this technology will continue to make huge leaps and unlike previous generations, its users will have the technological knowledge to take full advantage of its capabilities.
On top of this, while ignoring its other faults, globalisation has helped to improve social and career mobility, and with a predicted shortage of skilled labour in the future, there will be many opportunities for retirees to offer employers crucial skills and experience at reasonable rates.
All of these changes along with a new found flexibility and freedom will allow people to combine work and leisure on their terms, not just in retirement but throughout their working life too. Stories in the news such as 89-year-old Joe Bartley from Devon landing a job at a local cafe to save himself from “dying of boredom” and to help pay his rent make it seem like anything is possible.
Unfortunately, a desire to work later in life won’t be enough for everyone as we also need the capability to work. There will always be those who develop poor health, have to provide care or who don’t have the necessary skills and qualifications and as a result, cannot work. Simply focussing on improving financial capability and awareness won’t be enough. If the government is to insist on us being more self-reliant, then policymakers need to ask themselves much better quality questions before they’ll be able to design the sorts of solutions that will remove the uncertain, unrealistic and undesirable nature of working successfully in later life. Alex Johnston