The Office for National Statistics (ONS) has recently revealed that there are now more pensioners than under 16s in the UK.

The ONS’s figures demonstrate that the UK is changing. Life expectancy is rising, and the rapidly ageing population presents opportunities and challenges to corporations and individuals.

For individuals, planning for later life now means planning for more later life. While having an impact on today’s younger generations, longevity presents particular issues to those entering older age in the next decade or so.

A recent HSBC Insurance global report, The Future of Retirement: Investing in Later Life, identified an ill-prepared generation with high expectations for their retirement but, perhaps unwittingly, unprepared for the cost implications for funding their increased longevity and desired retirement lifestyle.

Individuals – a pragmatic approach

Investing in Later Life reveals that attitudes toward retirement are changing. Particularly how long we choose to work in comparison with those generations already enjoying retirement. Our views on savings, pensions, insurance, investments and succession planning are now distinctly different to our forebears.

Those approaching retirement, who will undoubtedly need to broaden their sources of retirement income, accept that governments may support them less in the future and recognise that longer working lives may become a reality.

The notion of raising the retirement age is increasing in popularity and people are also keen for the government to enforce additional private savings – recognising the need for individuals to take action in order to prepare adequately for their retirement, but also the need to be actively ‘encouraged’ to do so.

However, it is important for people to assume responsibility and take control of their own pensions. Individuals should consider a range of options, including new solutions to ensure they are not reliant on one source of retirement provision.

For example, it has been a year since self invested personal pensions (Sipps) became a regulated product and they are more popular than ever. Thousands of assets are being transferred into Sipps to consolidate pensions for high net worth individuals into a more flexible arrangement.

Transferring smaller pensions into a Sipp, to consolidate pension funds in one place and secure greater control and flexibility, will continue to be big business. Most people now have more jobs for shorter periods and so have some level of pension from a range of employers. Sipps allow you to keep track of these pensions and co-ordinate them into a coherent investment strategy.

They also offer the option to invest more flexibly into a much broader range of assets and funds and to have more flexibility as to how the benefits may be taken. Sipps, of course, are not the only option – simple stakeholder pensions, ISAs, company pension schemes and releasing equity from your home during retirement can all play a part in retirement provision.

However we choose to fund our later years, the period following retirement can be the best of our lives, and previous HSBC Insurance surveys have crystallised the overwhelming optimism for this period. But only careful forward planning and investment earlier on can help make this positive expectation a reality for more of us.

Investing in Later Life suggests that an optimistic approach to the second half of your life, today, comes hand-in-hand with a pragmatic approach to the realities of living longer.

Ageing workforces – a problem or an opportunity?

Most employers agree that the UK labour market is being transformed through population ageing. Over the past few decades, the UK has relied on migrant labour to compensate for its ageing population. But, as global ageing is set to increase around the world, this will potentially increase competition for skilled workers in the labour market.

Our report found that, in the UK, there is a growing acceptance of the need for employers to retain experienced older workers in their fifties and sixties to combat skills shortages – their experience, knowledge and reliability proving particularly attractive.

In turn, many workers are opting for a more gradual withdrawal from the workplace – rejecting the concept of a fixed and mandatory retirement age. Abrupt terminations of employment at 60 or 65 years may soon be a thing of the past and UK employers can capitalise on age-integrated workforces that include both young and old workers.

Governments and employers need to work together to enable the recruitment, retention and retraining of older employees, whose skills, expertise and experience is so valuable to our economies.

In conclusion

Ageing populations are an opportunity for us all – be it increased longevity for individuals or access to mature, skilled workers for employers. With this opportunity comes responsibility – for individuals to prepare and for employers to understand the value of older workers and ensure the working environment helps older workers to continue to flourish.