In recent years, a transformative shift has emerged in the landscape of retirement planning, signalling a departure from traditional models that once defined the baby boomer generation. This change, largely driven by the aspirations and values of Gen Z, underscores a growing recognition of the need for sustainable livelihoods that extend well into later years. At the Academy of Life Planning, we’ve long championed the integration of sustainable livelihood planning with traditional pension planning—a vision now gaining momentum among product providers and financial planners alike.
Significantly, almost half of Gen Z has expressed a preference for moving to part-time work once they reach retirement age, rather than ceasing work entirely. This knowledge, which came from Standard Life’s research, which is a part of the Phoenix Group, sheds light on the changing attitudes towards retirement. Furthermore, the research uncovered that 22 per cent of Gen Z are inclined to embrace self-employment at retirement from corporate life and venture into setting up their own businesses, marking a clear departure from traditional retirement pathways.
The findings highlight a notable divergence from past generations, with 76% of current retirees having stopped working altogether upon retirement. In stark contrast, only 17% of them moved to part-time work, and a mere 3% embarked on entrepreneurial ventures by setting up their own businesses. This paradigm shift towards part-time employment or self-employment in later years is not merely a preference but a strategic move that acknowledges the realities of longer lifespans and the dynamic nature of modern work environments.
Dean Butler, managing director for retail at Standard Life, articulates this sentiment by emphasising the practical benefits of a phased approach to retirement. This strategy not only caters to the financial imperatives of a longer life but also hinges on the availability of suitable employment opportunities and the maintenance of good health to fully capitalise on them. The economic implications are significant, with part-time work post-retirement poised to substantially boost pension pots, as demonstrated by Standard Life’s analysis.
For instance, engaging in part-time work for just three years beyond the conventional retirement age can render an individual £71,000 better off, assuming their pension remains untouched. In addition, annuity rates improve on deferred retirement. This scenario offers a glimpse into the potential for larger retirement funds for those able to work part-time for an extended period beyond retirement age. Such financial resilience is increasingly feasible, as people are more commonly accessing alternative savings, such as ISAs, before dipping into their pensions.
At the Academy of Life Planning, we view these findings not only as validation of our longstanding advocacy for sustainable livelihood planning but also as an imperative for financial planners to evolve. Our Game Plan training is specifically designed to equip planners with the knowledge and skills to create sustainable livelihoods, thereby enriching the retirement planning process with innovative, life-affirming strategies.
This paradigm shift in retirement planning reflects a broader societal transformation towards sustainability and well-being. It underscores the necessity for financial planning to transcend traditional boundaries, embracing a holistic approach that fosters not only financial security but also emotional, intellectual, and spiritual abundance. This in itself improves health life expectancy, and life expectancy. You live longer and better! As we navigate this transformative landscape, the Academy of Life Planning remains committed to guiding individuals and communities towards realising their ‘Kokoro’—a life of fulfilment, purpose, and prosperity.
In embracing these evolving narratives, we invite you to join us in redefining the future of retirement planning—a journey marked by innovation, sustainability, and unwavering commitment to the well-being of generations to come.
Questions & Answers
Q1: What significant shift has emerged in retirement planning among Gen Z compared to previous generations?
A1: Unlike previous generations that often aimed for complete retirement, Gen Z is showing a strong preference for transitioning to part-time work or self-employment upon reaching retirement age. Research by Standard Life highlights that almost half of Gen Z plans to move to part-time work, and 22% are considering self-employment or starting their own business, reflecting a shift towards sustainable livelihoods extending into later years.
Q2: How does the transition to part-time work or self-employment impact financial security during retirement?
A2: Transitioning to part-time work or self-employment can significantly enhance financial security during retirement. Standard Life’s analysis reveals that working part-time beyond the traditional retirement age can substantially increase pension pots. For example, someone who works part-time for three years beyond retirement could be £71,000 better off, assuming their pension remains untouched. This approach not only offers financial benefits but also aligns with longer lifespans and changing work dynamics.
Q3: What challenges might Gen Z face as they adopt a phased approach to retirement?
A3: Adopting a phased approach to retirement presents its own set of challenges, including finding suitable part-time employment opportunities and maintaining good health to take advantage of them. The strategy relies on the ability to continue working and the availability of roles that accommodate older workers, alongside managing health and wellness to remain active in the workforce.
Q4: How is the Academy of Life Planning responding to the evolving needs of retirement planning for Gen Z?
A4: The Academy of Life Planning is at the forefront of addressing the evolving retirement planning needs of Gen Z by integrating sustainable livelihood planning with traditional pension planning. Our Game Plan training is designed to equip financial planners with the necessary skills to create sustainable livelihoods, enriching the retirement planning process with innovative and life-affirming strategies that align with Gen Z’s values and aspirations.
Q5: Why is it important for financial planning to transcend traditional boundaries in today’s world?
A5: As society undergoes broad transformations towards sustainability and well-being, it’s crucial for financial planning to transcend traditional boundaries. This holistic approach not only fosters financial security but also nurtures emotional, intellectual, and spiritual abundance. By embracing sustainability and well-being, financial planning can contribute to fulfilling, purposeful lives that resonate with the values and aspirations of modern generations, including Gen Z.
These Q&As aim to deepen the reader’s understanding of the article’s themes, offering concise, insightful responses that reflect the Academy of Life Planning’s ethos and commitment to innovative retirement planning.
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