The overlooked retirement asset: your ability to keep earning

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When we think about preparing for retirement, we tend to think about pensions. But there is another asset that can have an enormous bearing on your retirement finances: your ability to keep earning for as long as you had planned.

Almost every retirement plan assumes you will be able to continue working, earning and saving until you choose to stop. Yet our new Longer Working Lives Index highlights some of the barriers people can face towards the end of their careers, from poor health and caring responsibilities to difficulties finding rewarding work.

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That can have serious financial consequences. Leaving work earlier than planned potentially means fewer years of earnings and pension contributions, less time for existing investments to grow and more years of retirement to fund.

So, alongside investing in your pension, is it time to start investing in your employability too?

We asked experts who work with experienced professionals what you can do in your 40s, 50s and beyond to give yourself the best chance of continuing to earn for as long as you want to.

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1. Don't get too hung up on seniority

After decades spent climbing the career ladder, it can be difficult to contemplate going sideways – let alone down.

But Andrew Middleton, founder of INDY (I’m Not Done Yet), a community and consultancy for experienced professionals, says becoming too attached to your previous status can unnecessarily restrict your options.

“If you have been a director, it is very easy to think the next role has to be another director role at roughly the same salary,” he says. “That can make the field much narrower than it needs to be.”

A sideways move could prove more interesting, while a less senior position might offer a better quality of life.

Lucy Standing, careers expert and founder of non-profit Brave Starts, makes a related point: your job title isn't your value. Experienced professionals can focus too heavily on titles or years of service when their real assets may be their judgement, relationships and ability to solve difficult problems.

2. Think laterally about where your skills could take you

Future-proofing your career doesn't necessarily mean finding another full-time job that looks exactly like the one you have today.

Middleton suggests asking yourself a slightly uncomfortable question while things are going well: what would I have if my current job disappeared tomorrow?

Could your expertise be used for consultancy or project work? Could you mentor, teach or take on a board role? Might you retrain for something completely different?

“I am not suggesting everybody needs to rush out and create a string of side hustles,” Middleton says. “But having more than one possible route to earning can make a big difference later on.”

And you don't necessarily need to make one dramatic career change. Both experts advocate experimenting: try a project, qualification, short contract, volunteering role or a day a week doing something different before committing to a wholesale reinvention.

3. Keep your network alive – before you need it

It is easy to neglect professional relationships when you've been happily employed for years. The problem comes when you suddenly need them.

“A lot of interesting work in your 50s and 60s does not necessarily appear through a formal job advert. It comes through conversations,” Middleton says.

Middleton advises having a good, relevant CV that uses the language employers are looking for. But he warns against becoming trapped in a numbers game of firing off ever more applications or focusing all your efforts on beating recruitment algorithms.

Instead, look for a route to a person. Do you know anyone at the organisation? Could somebody introduce you? Can you speak to the hiring manager or team before applying?

“Later in your career, your value is often more complicated than a CV can easily show,” he says.

And networking doesn’t have to mean suddenly approaching strangers asking for work. Reconnect with former colleagues, attend events, and use LinkedIn to have conversations rather than simply as somewhere to display your CV.

“Good networks are really just relationships that have been kept alive over time,” Middleton adds.

4. Keep learning

Years of experience can be extremely valuable, but experience alone won't necessarily keep you relevant. Standing argues that people shouldn't wait for their employer to take responsibility for keeping their skills current.

Her advice is to “become the external candidate”: ask yourself what skills you could bring that your employer couldn't simply find elsewhere.

That might mean keeping abreast of new technology, such as understanding how AI is changing your profession.

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And don't underestimate the importance of attitude. “Experience is incredibly valuable,” Middleton says, “but it can become a problem if it turns into certainty that you already know the best way to do everything.”

5. Don't do it alone

If you unexpectedly find yourself out of work, don't let embarrassment stop you reaching out to people. Reconnect with former colleagues and find out what is happening outside your previous organisation.

Standing also emphasises the importance of community. “One of the strongest predictors of success we see isn't talent. It's community,” she says. People who successfully reinvent themselves, she adds, tend to remain connected, sharing ideas, asking for help and supporting others.

Your ability to earn is part of your retirement plan

None of this means everybody should work into their late 60s or 70s. The point is to give yourself the option.

Continuing to earn even a relatively modest amount later in life could make a meaningful difference to your retirement finances. Part-time earnings, for example, could reduce the amount you need to draw from your pension and investments, potentially giving those savings longer to remain invested.

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But Middleton thinks the bigger benefit is choice. “If you keep your skills, contacts and confidence alive, you have options,” he says. “You might decide at 65 that you have had enough and do not want to work anymore, and that is absolutely fine.”

However, he describes earning capacity as “an asset in its own right” – and warns that once it has disappeared completely, it can be surprisingly difficult to rebuild.

That doesn't replace the need to save for retirement. If anything, the two forms of preparation reinforce one another.

Planning for retirement isn't only about building enough money to stop working. It's also about having enough resilience and choice to decide when you want to.

Got a burning question you want to ask? Why not drop us a line. Click here to ask your question.

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