Has Covid-19 disrupted your retirement plans?
The economic effects of Covid-19 stretch far beyond those people infected by the virus. The obvious example is the billions of pounds of government spending, but there are many others, such as the impact on those approaching retirement.
Recent research by the Institute for Fiscal Studies (IFS), discovered 13% of those aged 54 and above had revised their retirement plans. A little over half had increased their planned retirement age, while the remainder had brought it forward. Unsurprisingly the IFS found that the wealthier were more likely to be in the second category. Wherever you are on the road to retirement, there are lessons to be drawn from the IFS work:
■ You may not always be able to decide precisely when your working life comes to an end – circumstances may dictate the timing for you.
■ You should build in flexibility to your retirement plans as much as possible. As the state pension age continues to rise – it is now 66 – so too does the period widen between an early retirement and the receipt of the state pension.
■ Relying on work to supplement lowly pension benefits is a risky strategy. Health and economic issues can bring work late in life to an abrupt end – as we can see right now.
After the tumultuous events of 2020, it makes sense to review your current retirement plans. With the possibility of pension tax reform in the spring Budget, the sooner you start the process, the better.
•The Financial Conduct Authority does not regulate tax advice, and levels and bases of taxation and tax reliefs are subject to change and their value depends on individual circumstances. Tax laws can change.
•The value of your investment, and the income from it, can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.