Are you still working because you want to or you need to? Here’s why it matters

Work is a central part of all our lives. On average, you’ll spend around 90,000 hours working in your lifetime.

So, it’s no wonder that the decision to stop working and retire is a significant one. It’s a watershed moment and a huge change to your lifestyle – especially financially, as you adjust to life without a regular income from employment.

However, recent research indicates that this may not be the primary reason that many people continue to work. Rather, UK adults report that they would continue to work, even if they didn’t need the income it provides.

With this in mind, if you’re still working, it’s worth considering whether you could afford to retire – and if so, whether you’d actually want to, or whether there are other benefits you gain from being at work that you’d like to maintain.

Read on to find out more about the research into UK adults’ choices between earning and retirement, and some of the factors you may want to consider before you give up work.

51% of adults would continue to work, even if they didn’t need to

Naturally, the primary reason we all work is to generate the income we need to live our desired lifestyles. It’s also sensible to set aside wealth – both in savings for future needs and in a pension to provide long-term funds.

But these are not the only benefits of being at work. Indeed, you might enjoy the social aspects and the sense of purpose you derive from work. That’s exactly what the research referenced above suggests.

As reported by Cover, in a survey of 2,400 working UK adults, 51% said they would continue working despite it not being a financial necessity. Furthermore, 7% even reported already being in that position.

This data appears to be indicative of a longer-term trend. In fact, a 2015 government study found that, of those who expected to retire at 65 or before, the most likely reason given was that they wanted to, with 36% of respondents choosing this option. Being able to afford retirement came in second, with only 20% selecting this.

As a result, it’s possible to conclude that there are other benefits you can enjoy from work that go beyond the financial.

Some possible explanations for this could be the sense of purpose that work provides, and the concern about loneliness in retirement.

According to research by the University of Surrey, 70% of UK employees said their work gave them the feeling of a job well done either always or most of the time. Furthermore, 75% reported that they consistently had the feeling of doing useful work. The sense of achievement that work can offer might encourage people to continue working past the point they need to.

Meanwhile, figures from Age UK show that 9 in 10 older people who are often lonely also report being unhappy or depressed. So, individuals may prefer to stay in work to ensure they remain around other people.

While not exhaustive, these factors might go some way toward explaining why more than half of people would continue working even if it were not a financial necessity.

Make sure that you’re still working for the right reasons

Clearly, work provides many different elements in our lives. The income you receive might be the starting point, but the social benefits and a sense of purpose are just as important.

So, if you’re approaching the age where you might start thinking about retirement but you’re continuing to work, there’s absolutely nothing wrong with that – provided that you’re doing it for the right reasons.

You might be a driven individual who enjoys the challenge of working. Similarly, you might genuinely enjoy the company of your colleagues and want to continue spending time with them.

However, there are less empowering reasons for continuing to work past your desired retirement age. In particular, that could be because you think you can’t afford to retire with your current savings.

This would arguably be the wrong reason to keep working, since good planning could help you retire now if you wish.

Imagine that you’re wrong and could afford to retire. In that case, you could be continuing to work needlessly, when you could start drawing your savings and achieving your later-life goals.

Meanwhile, if you’re right, staying in work could be sensible in the short term. But by developing a plan now, you could get on track to achieving the retirement you want.

Working with a financial planner can help you retire at the right moment

This all really underlines the value of carefully considered financial planning.

Financial planning is all about effectively organising your wealth so that you can achieve your goals. Often, that means understanding your finances so that you can live the type of retirement lifestyle you want.

If you’re thinking about retirement, a financial planner can offer support by helping you define your goals for the future.

That will likely include deciding at what age you want to retire. You might also discuss the specifics of how you want to spend your time, whether that’s travelling the world or simply spending more time with friends and family.

Crucially, in doing so, you’ll be able to calculate how much your ideal lifestyle would cost. That will give you the answer to whether you can afford to retire now, or if you need a few more years of working or saving.

If it’s the former, you’ll then have the freedom to decide whether now is the right time to stop working, or if you still want to enjoy the purpose and social benefits of work.

Meanwhile, if it’s the latter, a planner can design a personalised savings strategy that will help you build the wealth you need to achieve your ideal lifestyle.

Either way, a planner can help you retire at the most appropriate time for you. You’ll be safe in the knowledge that you have sufficient savings to support your lifestyle after work, and that you’re doing it for the right reasons.

Get in touch

If you’d like help planning for the retirement you want, please get in touch with our team of experienced financial planners at Caliber Financial Management.

Email contact@caliberfm.co.uk or call 01525 375286 to speak to one of our team today.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.