Article How could retiring at a later age benefit you?

The State Pension age is currently 66 years old (rising to 67 in 2028) – but that doesn’t mean you have to stop working when you reach this milestone.¹ Between April and June 2022, the number of people aged 65+ in employment in the UK increased by a record 173,000, reaching an all-time high of 1.468 million.²

Choosing when to retire is a personal choice – here are some of the benefits that retiring at a later age might bring you.   

1. Activity and mental stimulation

Work is mentally stimulating and can help keep you sharp. For some people, retirement means valuable time to themselves to discover what gives them joy and purpose. But others find meaning and energy in their work – according to research, postponing retirement may provide effective protection against cognitive decline (for example forgetfulness).³

Retiring later may also allow you to maintain more regular social connections with colleagues in the workplace. This could counter any feelings of loneliness and isolation that many people experience in retirement. 

2. You might be able to save more

61% say they’re not confident they’ll have saved up enough to cover their own care costs in old age.⁴ Retiring later gives you more time to save money from your earnings and build up your nest egg.  

For example, if you decide to work past the State Pension age, your take-home pay may increase as you’ll no longer be required to pay any National Insurance. With an ongoing salary, you might not need to draw on your retirement funds as early too, giving you a more comfortable lifestyle later on in life.  

Your pension savings may also have a chance to grow. By working for longer, you’ll continue to pay into your pension, which means there could be more funds in your account that can be invested – potentially offering more returns. If you decide to change your retirement date, be sure to check with your private pension provider about any associated charges or restrictions. It’s important to remember the value of your pension pot can still fall and rise, and the final value of your pension pot when you come to take benefits may be less than what has been paid in. 

If you delay claiming your State Pension, the amount of money you’d receive every month when you start taking this benefit will be higher. This is because your State Pension increases by the equivalent of 1% for every nine weeks you defer (as long as you defer for at least 9 weeks and reach the State Pension age on or after 6 April 2016) – working out to just under 5.8% every year.⁵ As a plus, you won’t need to pay tax on your State Pension during the deferment (delay) period.    

3. You can continue taking advantage of employment benefits   

Many employers offer benefits such as health insurance, medical cover and sick pay, which could come in handy during your later years. This means that if you work for longer, your employer might continue covering all or parts of certain expenses that you’d otherwise have to pay yourself.  

You may also still be eligible for employer pension contributions beyond the State Pension age – visit this page from MoneyHelper to find out how you might be affected.

Do what’s right for you

Retirement means different things to different people. Some people might aspire to retire early so they can fully relax and focus on themselves – while others might choose to postpone retirement to stay mentally sharp or boost their savings. It doesn’t have to be all or nothing – you could consider working reduced hours or taking up a less demanding job – giving you the best of both worlds.  

Of course, retiring later – or earlier – might not be possible for everyone and depends on your individual circumstances. Choosing when to retire is a highly personal decision, and you should decide when to do so on your own terms.  Visit MoneyHelper’s website for more guidance on retiring later or delaying taking your pension pot.