Self-employed and 56: is it too late to save for retirement?

This reader quit his job to become a writer. Now he needs a pension, by Sam Brodbeck

Working for yourself has never been more popular. Since the financial crisis, there has been a self-employment boom in Britain, while “gig economy” giants such as Uber and Deliveroo are rewriting the rules of work.

Yet being your own boss means forgoing valuable perks. Employee benefits such as life insurance, private healthcare and company pensions can be far harder – and more expensive – to replicate when you are on your own.

A major government review of the self-employed sector earlier this year was criticised for failing to address the huge pension savings gap.

Over a quarter of self-employed workers are not saving at all, according to research from Fidelity International, a pension and investment company. Of those who do, less than half save every month.

Phil Andrews, 56, had some small work pensions built up during his career as a postman with Royal Mail. But last year he cashed these in to fund a new career as a freelance content writer. His earnings fluctuate between nothing and up to £500 a week and he has sold a few thousand copies of his self-published novel The Best Year Of Our Lives.

Mr Andrews does not own his property and is resigned to renting forever. His only other financial assets are some life insurance policies that would pay out £500,000 if he died. However, the premiums are £70 a month and the cover ends when he is 65. He lives with his wife and one of his two children; the other has moved out.

Mr Andrews said: “The plan is to turn my writing into an income to match my Royal Mail salary and then restart saving before I can take my state pension in about a decade’s time.” It is essential that Mr Andrews undertakes a budgeting exercise to determine how much spare income he can commit to saving and whether this will be built up in cash and paid over to an investment in a series of lump sums or on a regular basis.

The latter may be harder to maintain due to the unpredictable nature of his earnings. He is contributing a sizeable sum towards life insurance each month. It is worth reviewing this cover to access a potentially more appropriate alternative such as “family income” benefit cover, which will cover the loss of income to the household should he die. This may free up some monthly budget to put towards savings.

The state pension has changed and everyone under state retirement age was assessed in April 2016 and given a credit against the new scheme. This is individually calculated and can differ tremendously depending on the working pattern of the individual and whether they have been in employment, have been a member of