Research⁵ suggests a significant minority of over-55s either have or are planning to unretire. Worryingly, though, a majority in this group have not checked the tax implications associated  with such a decision, leaving many potentially at risk of falling foul of the unretirement ‘tax trap.’

The great unretirement continues

According to the research, more than a quarter of people aged 55 and over plan to continue with some form of paid work after retiring, with respondents citing a
variety of reasons for doing so. For some, a desire to generate additional income to pay for luxuries was a key driving force, while others felt it would keep their brains active or give them a better sense of purpose.

Unknown tax implications

However, the survey also revealed that almost two thirds of those that have or are planning to unretire had not checked the potential tax implications of doing so; additionally, six out of ten over 55s who are either working or plan to work in retirement had no plans to seek financial advice.

Minimising the tax burden
Clearly, anyone undertaking paid work in retirement needs to fully understand the tax implications, which include a possible increase in tax liability if extra earnings take someone’s income above the personal tax threshold or pushes them into a higher tax bracket. They also need to consider how any potential liabilities could be mitigated, for example by maximising the use of tax reliefs and allowances.

On an even keel
If you are currently working in retirement or plan to do so, we can provide you with personalised advice tailored to your unique set of circumstances that will help structure your finances in the most tax-efficient manner and ensure you avoid falling into the unretirement ‘tax trap.’

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Reassuringly for investors, the latest batch of projections from economic soothsayers continues to predict a period of steady, if unspectacular, global growth. The forecasts also highlight a number of economic concerns including ‘sticky’ inflation, large budget deficits and geopolitical uncertainties, which could inevitably create some investment challenges.

Growth rates beat expectations
Economic growth figures released over the summer generally proved stronger than analysts had expected, particularly in relation to Europe and the US (in Q2). And while economic momentum is expected to soften across the second half of this year, forecasters are still predicting steady rates of growth. The latest figures from the International Monetary Fund (IMF), for
instance, forecast global growth of 3.2% for the whole of 2024 with the rate rising slightly to 3.3% next year.

Inflation persistency
The IMF’s musings were contained in a report entitled ‘The Global Economy in a Sticky Spot,’ which highlighted two prominent near-term risks currently undermining growth prospects. Firstly, the IMF warned that ‘services inflation is holding up progress on disinflation’ which could result in interest rates remaining ‘higher for even longer.’ Secondly, a deterioration in public finances has left many countries in a position of fiscal vulnerability and this is ‘magnifying economic policy uncertainty.’

Geopolitical uncertainties
In what was dubbed ‘the year of the election’, geopolitical uncertainties unsurprisingly continue to be a key concern as well. Indeed, their impact on global growth prospects can only be expected to rise in the near-term as the US presidential election looms ever closer. Continuing geopolitical conflicts and the rise in geoeconomic competition is also creating ongoing challenges for the global economy.

Elements at play
Economic resilience has flowed through to central bank monetary policy as global institutions have largely adopted a cautious approach. Slower but still positive growth, lower inflation and interest rate reductions are a positive combination for investors. Whatever uncertainties do lie ahead, one investment fundamental remains constant: long-term investors are best served by holding a well-diversified, multi-asset portfolio based on sound financial planning principles and thorough research. We’ll help ensure your portfolio remains well-balanced and with the right
mix of assets; we’re always focused on finding investment opportunities.

The value of investments can go down as well as up and you may not get back the full amount you invested.
The past is not a guide to future performance and past performance may not necessarily be repeated.
The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning.