how flexible retirement works

What you should know about flexible retirement

Flexible retirement is not a new concept, although it sounds really futuristic. Retirement is a time period that many people look forward to. It allows you to relax and enjoy all the retirement benefits, such as enjoying your hobbies or spending more time with your family. Up until now, we knew that reaching the retirement age means that we stop going to work, access our pension pot and spend it the way we want. Flexible retirement may change that.

What is flexible retirement?

Flexible retirement is a way to enjoy some of the retirement benefits while working. Sometimes, the average retirement age feels very far away. As we get old, fatigue from all the years of hard work takes a toll on us. The effect of growing old depends on the person. Some become less active whilst others feel fine to keep on working.

As tempting as it would seem to retire in a more laid-back fashion, it’s crucial to consider the realities of flexible retirement. Reducing your working hours and drawing on your pension benefits is becoming a more appealing option for persons over the age of 55.

Allowing an employee to continue working while taking advantage of their retirement benefits is known as a “flexible retirement.” This can result from a mutual agreement between the employer and the employee. Flexible retirement may be useful for managing an ageing workforce or retaining skills.

Advantages of flexible retirement

When it comes to flexi retirement, there are advantages and disadvantages. This should be no surprise as retirement is one of the most important periods in our lives. Preparing to get your first pension involves complicated processes. We should be careful how we manage retirement savings. Let’s see how you can benefit from flexible retirement.

Continue working as you want

Flexibility in retirement allows you to enjoy a more relaxed lifestyle without giving up the routine and relationships you’ve built over the course of your career. Sometimes we need to hit the brake and control the pace we live life. Working 5 or 6 days a week for years makes us tired and forces us to think about our lifestyle. However, many people don’t want to retire; they want to reduce hours or days of work to become focused again. Flexible retirement allows you to do exactly that as you access a part of your pension savings whilst you keep working with your colleagues. 

Keep earning income with reduced working hours

Earning money while you don’t work the same amount of hours you have been working is a convenient option for people who’d like to stop being on the front line. Of course, changing your working life that way involves a specific process. The process would require some steps that need to be considered and evaluated.

Since you will be working fewer hours or days, the lost income would be replenished by funds coming from your pension pot. Therefore, you have to be careful in what has to do with flexible retirement as a mistake could cost greatly. We always recommend getting financial advice from a qualified adviser that can suggest flexible retirement options.

Disadvantages of flexible retirement

Your pension fund is your safeguard for the future. You have to be careful before making any decisions and evaluate every option based on strict criteria. Let’s see what are some of the flexible retirement’s disadvantages.

Full retirement age might not be just around the corner

Less work means smaller wages and fewer contributions. Reduce your hours at your standard retirement age, much alone sooner, and you run the risk of having to work for many more years or having to make do with a meagre pension.

Not able to retire due to lack of funds

Flexible retirement isn’t an ideal solution for everyone. As inflation increases and wages remain low, pension savings also remain at a lower than originally anticipated level. Therefore, some people may not be able to use the option of flexible retirement. A detailed analysis of your income sources and savings could clarify if you can consider flexible retirement without jeopardising everything you have done until now. 

Holborn and retirement planning

Retirement can be one of the best time periods of your life. Nevertheless, if you haven’t designed a proper retirement plan, your life after work could become complicated. Surely no one would like to stress about covering financial commitments after 30 or 40 years of working every day. Now is the time to enjoy your free time and do the thing you always wanted to do. 

Retirement planning is the way to go to minimise stress and anxiety. Holborn’s experienced and fully qualified advisers are here to help you make the right choices. For more than 20 years, Holborn serves expats all around the world to get ready for the next stage in their life. Thanks to Holborn, financial advice is not complicated or expensive anymore. Why don’t you start building a financial plan today by getting in touch with us for a free personal financial review?

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