Could furlough lead to more people semi-retiring?

Covid-19 | Covid-19 Advice | Employment & Skills | Sponsored

9.6 million jobs were supported by the government’s furlough scheme*. This has led to many older workers who have been unable to work due to lockdown restrictions to realise what their working life and winding down could look like.

For those who were considering retiring in a year or two, they might decide to not return to work or to reduce their hours as part of phasing into retirement after the furlough scheme ends.

Before making this decision, it is important to look at your finances in detail to see what is possible.

Financial planning before deciding whether to phase into retirement

Here are some of the main financial aspects you need to consider before deciding whether you should phase into retirement earlier than you originally planned.

Will your new income amount cover your essential bills?

You need to consider how much income you can afford to lose by transitioning to part-time or stopping work all together. Firstly, create a list of all your essential outgoings so you know the amount you need per month to cover these.

You need to consider if working part-time would mean you need to start drawing income from your pension pot or other sources to supplement your income. If you do need to start using your pension pot earlier than planned, a financial adviser at Four Wealth Management can work with you to create a plan to determine how much you can withdraw each month from your pension while maintaining your current standard of living. It may mean you can withdraw less each month as your pension pot needs to last longer due to you retiring earlier.

Do you have any outstanding debt?

Before phasing into retirement or stopping work completely, it may be a good idea to pay off as much of your debt as possible to reduce your monthly outgoings. For example, you could pay off your mortgage or increase the amount you pay off per month to pay it off quicker.

Your financial adviser will be able to help you with managing your debt, they will usually look at which debt has the higher interest rate so you can pay this off first.

What will you do when you retire?
Lockdown has meant there have been barriers set by the government around what you can and cannot do. If these barriers were lifted and you could travel freely, have you considered what you want your retirement to be like?

You may have found yourself with surplus income during lockdown due to the restrictions, however, it is important to consider the amount you would usually spend on social activities such as at restaurants, pubs, theatres, sporting events etc. You will need to factor sufficient income for this during your retirement.

Coronavirus challenges

One of the challenges of retiring now is that dependents are likely to be less financially secure because of the impacts of Coronavirus. For example, they might have been affected by redundancy, furlough or lost earnings through other means such as reduced demand for services. Being able to supplement income for your family members in these difficult circumstances might affect your retirement plans as you may need to work longer in order to support your family.

Do you need to review your protection policies?

Many employers provide income protection and life insurance for employees. If you are considering retiring or going part-time you may lose these protection policies which could put you and your family at risk.

At Four Wealth Management, a Financial Adviser can recommend the right levels of cover to protect you and your family.

Find out more about protection policies

Next steps

If you are considering retiring imminently or phasing into retirement, you should consider speaking to a financial adviser at Four Wealth Management before making any important decisions. Your financial adviser will help you to calculate if you will have sufficient income at retirement.

Phone us on 0117 973 0500 to book a no-obligation meeting.

*Statistica, ‘UK, number of people on furlough’, 2020

Four Wealth Management Ltd is an Appointed Representative of and represents only St. James’s Place Wealth Management (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website at

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