Taking on easier work but working for longer has its benefits.
Early retirement is the ultimate dream. However, slowing down your approach while taking on a part-time or a more junior role before stepping back could boost your pension by tens of thousands of pounds.
The pay cut would be more than offset by extra savings – potentially adding as much as £80,000 to your final pot.
A 55-year-old would be better off switching to a lower-paying job and retiring at 66, rather than sticking with their higher salary and leaving work at 62.
For example, a 55-year-old earning £50,000 with a pension worth £200,000 who retired at 62, would reach age 66 with a total pension wealth of £224,763, assuming moderate levels of both investment growth and how much they spent.
Had the same 55-year-old switched to a job that paid £35,000 and retired later at 66, they would end up with £314,017 – more than £89,000 extra.
Delaying retirement allows pension savings more time to grow without the disruptive effect of taking an income.
If you’d like to discuss your pension please feel free to contact our advisors