As we live longer, the mid-point of our lives continues to shift. Some of us will still be able to retire at 55, but for lots of people the retirement age is creeping up. In fact, the over-45 employment group is growing at a rate of a quarter of a million people a year.
Part of being a responsible employer is about looking after the wellbeing of your employees, whether that is physical, mental or financial. Building resilience in these areas is important, and for your older employees, making sure they’re prepared for life beyond work is definitely an area where you can help.
At Aviva, we recognise that although many staff are aware of higher retirement ages, not everyone has looked at whether they need to change their plans for the future.
That’s why we’ve introduced a mid-life MOT for all our employees. We want to make sure they’re in good physical, mental and financial health as they head into the last few decades of their working life. As an employer, you could take a similar approach for your older employees.
It’s a non-standard life
Until quite recently, life for an average man of employment age was fairly set:
- start work after school, further training or university
- get married, buy a house and have children
- continue working until retirement age – which could be as early as 50 and on a final salary pension.
Life expectancy was lower, but a retiree could look forward to a few decades of living the retired life on a very comfortable income.
For a woman, working life might be interrupted by time out to bring up children, or end completely at that point, but life in retirement offered a similar prospect.
Fast forward to now and few of us are lucky enough to hold a final salary pension, plus the retirement age is currently 65/67, but likely to rise again. There is no “standard” life, as there may have been for our parents — our employment is far more fluid, but so too are our personal lives.
We’re living longer too, which means our pension pots may need to last us an extra 10 years, maybe 20. Any of these scenarios could apply to you or your employees:
- Buying a house at a young age is a far more difficult ambition for younger people today than it was for anyone older than 40.
- The number of renters aged 45–54 has almost doubled in the 10 years to 2017, from 8% to 14%. This group won’t have the “luxury” of re-mortgaging, selling or applying for equity release on their home to fund their retirement.
- Offspring are often still living at home well into their 20s (or moving back in) and some may need ongoing assistance from the “Bank of Mum and Dad.”
- Others in their 40s may still have small children as the average age of first-time parents continues to rise — more parents are having children now in their 30s than in their 20s.
- Job security has almost completely disappeared. It’s rare these days to be in a job for life. This may be because people don’t want this anymore, but it’s also due in large part to an uncertain economy which no business seems immune to.
- Since the expansion of options on how to take money from a pension, retirees are no longer obliged to take out an annuity. For many, that is no longer be the best choice for them. Others may know of the opportunity to cash in their entire pension pot, without understanding the tax and long-term retirement implications.
A mid-life MOT — more than just an oil change
If your employees have had a pension for more than 20 years, the options they chose back then could be entirely inadequate now.
This is where a mid-life MOT can help. We offer our employees a face-to-face seminar with experts in the field, information about government resources which may help with financial decisions, and a consultation with a qualified financial adviser.
As an employer, this could be a valuable addition to your employee programme. It gives employees aged 45 and over an opportunity to review their plans at a crucial stage in their lives. Offering an MOT shows your employees you have their best interests at heart.
You can extend the MOT to look at the family as a whole, helping your employees look at wider commitments and circumstances. Parents may be looking for a way to help their children get on the property ladder — or just move out! — and now could be the ideal time to investigate their options.
By offering them the opportunity to take a mid-life MOT, you can help your staff make sure they’re making the right choices. It also won’t hurt them to know you care about their futures beyond their employment with you!
If you want to hear more about the mid-life MOT, listen to our podcast where, you’ll hear how it works and how it’s helping people think more clearly about their work, wealth and wellbeing.