Martin Palmer, head of corporate pensions marketing, Friends Provident, discusses the perils involved in planning for retirement

Monday 18 January is a day to be reckoned with. According to the clever people who work these things out, that's 'Blue Monday'. It's considered the most depressing day of the year - the Christmas glow has faded, New Year's resolutions have been broken, cold winter weather has set in and credit card bills from Christmas land on doormats, eating up the pay-cheque before it arrives.

But this year there's another contender - 6 April.

That's the day when the minimum pension age rises to 55. For the past year or so an army of advisers has been talking to their clients about their options, but the fear is that there's somebody out there who is unaware that their plans to retire early are about to be put on hold for five years.

A bit late
For two reasons it's a bit late to start thinking now about retirement before April. From a practical point of view, if you wanted to access your pension early the process needs to start much earlier than April in order to complete everything before the deadline. And in fact, for most people the truth is that taking early retirement isn't a decision that can be made with four months to go - it's something that takes years to plan and save for.
So what is the actual point at which people - ordinary people, not those of us in the industry - start to finalise their target retirement date? Looking at members of DC schemes, most have targeted the scheme's normal retirement date (usually 65) as the date they want to take their benefits.

But this is rarely the result of careful planning and analysis of when they can afford to retire.

The truth is that for most people retirement is something that happens when you become too old to continue working, rather than when it's most affordable. There is still an element of 'autopilot' to the process which is a hangover from the days of jobs for life, gold watches and final salary pension schemes.

Yet for many, working past 65 is going to be an economic necessity - as rises in the state pension age acknowledge.

Uncertainty
The task of planning for retirement is now dwarfed by the insecurity that surrounds the future. Even the state pension age isn't set, since George Osborne unveiled proposals to raise the age to 66 for men from 2016, eight years ahead of the current proposals.
People also have concerns about job security at a time when the economy is struggling, and we now face the threat of higher taxes to come after a General Election, no matter who wins. All of this encourages people to think about surviving the here and now rather than planning for the when and if.

But late retirement is also worth planning for. Work that might be suitable at 40 may not be so appropriate by the time you reach 70.

A long commute or physical requirements may enforce a career change, and we can't all work in DIY superstores when we reach 65.

It might be time for people to take advantage of longer life expectancy and flexible working arrangements and plan a gentler pre-retirement, by monetising hobbies or working part-time earlier, and then for longer.

As an industry, it's perhaps time that we started to encourage people to focus more on the end game - the decumulation phase - as well as the accumulation phase. And by focusing on that, the hope would be that people will be better prepared, have more time to change plans, and be better able to cope with changes to legislation and circumstance.

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