While many are planning an early exit from the workforce, or intending to leave at state pension age, others are more flexible. Large numbers of people have reassessed their retirement as a result of the pandemic, but working longer could be beneficial, especially amid the cost of living crisis.
Recent research undertaken by Aegon has found individuals could stand to benefit from working for a longer period of time.
For an employer aged 60 with a pension of £200,000, this could provide a retirement income of approximately £4,900 per year.
However, deferring until just 61 and continuing with workplace pension contributions of £200 per month could make a real difference.
It could see the pension pot soar up to £211,000.
With one less year of retirement to spread this fund over, Aegon estimates the pot providing an income of around £5,700 per year – an additional £800 or 16 percent higher.
It was found the longer people remain in work, the more significant the boost to their retirement income.
For the same individual, delaying retirement until the age of 65 could mean the pension fund grows to £259,600.
This means a monthly income of around £8,500 – or 73 percent higher.
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Steven Cameron, Pensions Director at Aegon, said: “We’ve seen large numbers of over 55s moving into early retirement during the pandemic, some because of lost employment or poor health, but others through choice.
“However, soaring prices means many retirees relying on fixed incomes are currently under huge pressures as their purchasing power tumbles.
“For those drawing down a retirement income flexibly, any increase in the amount taken from their pension carries the risk of depleting pension savings earlier than planned.”
Remaining in some form of employment may therefore be beneficial, according to the expert.
Some individuals may not have the choice due to poor health, redundancy or plans which have been set in stone, for example.
However, for those with the flexibility to do so, having a full-time or part-time role could provide financial stability.
Mr Cameron continued: “Not only can employment offer a sense of purpose, but the financial benefits extend beyond maintaining your current income to increasing your future retirement income as well.
“This is due to the triple boost to your pension from continued investment returns on your pension pot, further pension contributions from you and your employer, and fewer years to spread the fund over once retired.”
For each year a person decides to defer their retirement, they can boost their pension income.
This is also the case for the state pension, which may also increase as long as it is deferred for at least nine weeks.
However, the actual difference will be dependent on a number of factors.
Mr Cameron states these include how much a person has already built up, their future investment returns and how much a person and their employer keeps adding in.
He concluded: “A financial adviser is best placed to support you on the retirement options available.”
It is worth noting investment always comes with a level of risk.
The value of investments can go up as well as down, and investors may get back less than they originally invested.