Tax treatment depends on your circumstances and is subject to change
The past few years have been a tough time for many, not to mention the hundreds of thousands of 50-64 years-old’s who found themselves out of work. With the slow return to normality, many who lost their jobs throughout the pandemic will be looking to return to the workplace. But this may prove more difficult for some.
With ageism in recruitment still a prominent issue many people face, it is adding more strain on an already stressful situation. In this article, we will explore the impact of ageism in the workplace and the options you have available to you if you find yourself struggling to re-enter the world of work before your retirement age.
Ageism in recruitment is making it harder for those nearing retirement age to find new work. Experts say this is leaving some older workers trapped in insecure employment, unable to find suitable work, or forced into early retirement.
Research by the National Institute of Economic and Social Research and Demos found that 36% of people aged 50-69 think their age would put them at a disadvantage when applying for jobs. This is more than any other age group. And 17% say their job applications have been unsuccessful simply because of their age, with a further 29% told that they are too experienced for the role.
This can have quite a negative impact on some people. Of those who have experienced ageism, more than two thirds said it had affected their confidence, and 43% said it had impacted their health and wellbeing. It has put a lot of people off from ever returning to the workplace, and understandably so.
So, what if you find yourself in this position? Well, the good news is that it’s not all doom and gloom. With the great flexibility you have with your pension from the age of 55 under current government legislation, early retirement could be a possibility for you. And, if you decide you want to postpone retirement for a few more years, there are other ways to bring in an income.
Early retirement could give you the opportunity to start experiencing the joys and freedom that come with retirement sooner than you expected. Whether that is spending more time with the family or finally enjoying the things you never had time for.
When considering early retirement, it is important to take a good look at your finances. After all, your pension will be your main source of income for years to come, so you need to make sure that it will last you. And releasing money from your pension early will leave you worse off in retirement. From the age of 55, you can start to access your pension. This includes releasing the first 25% as tax-free cash. Whether you are looking to retire early or are still searching for a new job, this lump sum could help you out financially until you start receiving a regular income again.
It is a good idea to first check with a regulated financial adviser to make sure this option is affordable for you and won’t take too much from your pension too early.
Here at Pension Access, our regulated pension specialists can help you find out how much your pension is worth and how much tax-free cash you could withdraw. You can also discover if withdrawing this money is the best decision for you.
It is also a good idea to explore all your options surrounding your pension. You might decide that rather than releasing your tax-free cash, for example, you want to start taking a regular income instead. Our advisers can help you to set this up and start making the most of your pension.
In some cases, withdrawing your pension early might not be the best course of action as it may not leave you with enough to live on throughout retirement. In this case, it is a good idea to leave your savings invested for a bit longer. Take a look at your pension scheme and make sure you are getting the most for your money. At Pension Access, we can help you transfer your pension to a scheme with negotiated discounted charges and a better history of performance. It’s important to remember that past performance is not a reliable indicator of future results. This means that over the years, your pension pot could have the potential to grow much more than if you left it with your current provider.
If retiring early isn’t for you and you are struggling to find regular employment, there are a few things you can do to improve your situation.
The most important thing is to gain a better sense of control over your finances. By making a budget, you will be able to get a clearer picture of your finances and find ways to manage your money. Knowing your budget will help to relieve some of the stress that comes with losing a regular income.
If you haven’t done so already, then looking into employment benefits could be a great place to start. This income could help you keep on top of your bills while unemployed without having to dip into your savings, which could mean leaving yourself with more money for later in life.
While it may prove difficult for some to get back into the world of work there are other ways to secure an income. You might have a hobby or interest that you have skills in that could bring in some money each month. There are lots of marketplaces out there where you can sell goods you have made or services you can provide.
You might even consider freelance work. While some job applicants may be unsuccessful for being too experienced, you can get an income from your area of expertise by doing freelance work. And generally, the more experienced and skilled you are, the more you can charge. The flexibility of freelance work may even allow you the opportunity to start cutting down your hours in the run up to retirement or give you the freedom to enjoy some of the pleasures of retirement early.
Job loss throughout the pandemic hasn’t been easy for anyone, especially older workers who are struggling to get back into the workplace. If you find yourself in this position and are looking to your pension to help you out in the here and now, you aren’t alone. Whether you are wanting to retire early, withdraw your tax-free lump sum or just want to know your options, our regulated pension specialists are here to help.
We can help you to make the best possible decisions when it comes to your pension.
Taking pension money early is not right for everyone as it will leave you worse off in retirement. Also, tax treatment depends on your circumstances and is subject to change. That’s why it makes sense to get help from a regulated specialist.
