Thinking about carrying on working an extra few years? Or even returning to work? Tony Watts OBE reports on new think tank recommendations that might help those whose finances mean that retirement is not quite on the cards yet…

It’s an obvious enough equation: if the Government can encourage/enable more people to hold off their retirement plans, it enables them to save more for their retirement. But how can it be achieved? 

Some might even question whether it SHOULD be achieved, arguing that older people should be encouraged to retire early to allow younger people to come up through and take on their jobs.

Occasionally you do still hear that old canard trotted out; but for the most part, the message is now understood: older people working do not take jobs off of younger cohorts. They spend more money, pay more taxes and receive fewer benefits. They actually boost the economy. And a boosted economy has more jobs etcetera.

In fact it’s been estimated that for every additional year you keep the work force employed rather than retire them, you add 1% to the GDP. No small beer in today’s laggard economy.

The Government itself is as keen as mustard to make that happen, and a great deal of the manpower of the steadily shrinking DWP is focused on extending working lives.

It’s not an easy task as there are so many forces militating against it: employers favouring younger talent; some manual jobs not being suitable for all older people; pressures on older people themselves to give up working to act as carers; ill health and disability; the lack of hireable skills amongst some older workers; and the fact that – given the choice and resources – some of us would actually quite like to give up working.

But despite these factors, the policy is working: more people aged 65 and over are in work today than ever before. However that is partly explained by the boomer surge in population; conversely record numbers of older people are leaving work early – primarily through ill health and to be carers.

A new report by the Resolution Foundation has found that “employment levels among 50-64 year olds could be increased by around 920,000 over the course of this parliament, whilst employment among 65-69 year olds could be boosted by 240,000”.

How could this be achieved? The report rightly points out the received wisdom that employers need to offer more flexible working arrangements to retain older workers – part time / job sharing and so on.

The benefit to individuals is that they can top up their pension pot or simply keep mentally, socially and physically active. The benefit to employers is that they keep hold of personnel whose experience and knowledge could actually help the company.

The other interesting suggestion – and one I have not come across before – is that the right to Statutory Sick Pay should be extended beyond six months for workers over the age of 50, allowing them more time to return to work following a period of ill-health.

Similar rights should also be given to those who need to take time off for caring responsibilities, the report says.

These recommendations, say the Resolution Foundation, would help keep employers in touch with their staff, whilst also reducing the number of older people leaving the labour market altogether.

It’s a helpful contribution to the on-going debate, and comes at a time of great uncertainty for many heading into retirement. With the stock market in turmoil, pension funds suffering, ever greater demands upon the bank of mum and dad, and swathes of older people being take out of the workforce to care for elderly parents, many of us are recognising that a few extra years earning an income will be needed to fund our retirement.

Added to that, there is the dilemma for many women born in the 1950s, who now find their timetable to receive a State Pension has been pushed back by a few years.

The big question to be asked is this: can I afford to retire on the amount of money I can expect to receive? If the answer is a resounding no, those able to return to/remain in the workforce should at least be exploring the options available to them – including having conversations with their employer, considering setting up their own business, or cutting their cloth.

To find out if or when YOU can afford to retire, a few minutes spent on the Free RetireEasy LifePlan,  playing through some of the scenarios, will give you all the answers you need to know – even if they are not necessarily the ones you want to hear!