Which employee benefits should you pay for when you retire?

If you are approaching the end of your working life, you may be looking forward to a retirement where you can spend time with friends and family, enjoy hobbies and take holidays.

But while you may be focused on making enjoyable and exciting plans such as these, you also need to think carefully about various elements of your finances.

One area which you can’t afford to overlook is the benefits you got as an employee, and the fact you will lose these when you stop working.

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Think about all the benefits you got from your employer

During your working life, you may have got a host of employee benefits from your employer (alongside your salary). There are a lot of different kinds of benefit, but common ones include health insurance, life insurance, critical illness cover, a dental plan, gym membership, a company car, childcare – and a subsidised canteen.

Some of these may have been core benefits; these are general benefits offered to everyone in the company who is eligible for them. By contrast, with flexible benefits, employees are offered a “menu” and can pick the ones which are most useful to them, based on their particular circumstances.

What benefits am I entitled to when I retire?

Employee benefits will cease

Once you stop working, you will no longer receive workplace benefits.

As the loss of these benefits could impact on both your finances and your lifestyle, you may want to think about paying for some or all of these products and perks yourself.

Here we look at some of the common employee benefits, and set out some of the things to remember when considering if you still need them in later life

Life insurance

This type of cover pays out a tax-free lump sum in cash if you die within the terms of the policy. Life cover through work is typically between two and four times your annual salary. If you have a mortgage or dependents, this cover is essential. 

Before taking out a new policy in retirement, you should check that neither you nor your partner is already paying for a private policy. If you do already have some cover, you may just want to top this up. If you do need to take out a new policy, be aware that costs could be a lot higher now that you are older.

Do you need different life insurance cover when you get older?

Critical illness cover

This is often sold alongside life cover, and can provide a tax-free cash lump sum if you are diagnosed with one of a specified list of serious illnesses, such as cancer, heart attack or stroke. You should consider paying for this type of protection in retirement if you don’t have savings to tide you over should you become seriously ill or disabled. Once again, the older you are when you take out the policy, the more you are likely to pay, as your risk of getting ill increases. Costs will also be higher if you are in poor health.

Health insurance

Also known as private medical insurance, this cover pays for the cost of private treatment, and can be one of the most valuable perks offered by an employer. As a result, losing this cover can come as a big shock – especially as people then face the problem of buying cover in retirement, typically at an age where premiums can increase. 

If you do decide to pay for a policy once you’ve stopped working, you need to do your research to check what is covered by the insurance you are looking to buy. You need to check which pre-existing conditions are covered, how quickly you will get access to treatment, and which private hospitals you can go to. 

Equally, in retirement, you may want to consider a health cash plan, which would help pay towards dental bills, optical bills and therapies, such as physiotherapy. 

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Gym membership

Gym membership can be a nice perk when working for an employer as it can mean heavily subsidised fees at a local gym or chain of gyms. But you need to think carefully before signing up to a gym in retirement, as monthly fees can be very steep, and are only worth paying if you can be sure of working out on a regular basis. 

If you think your enthusiasm may wane after a few months, consider alternatives, such as a pay-as-you-go gym, or take up cycling, running or walking instead.

10 ways to get fit without going to the gym

Company car

If you were lucky enough to get a company car during your working life, you will have made significant savings on the cost of owning a vehicle; this includes big savings on fuel. 

If you are set on buying a car once you stop working, you need to think carefully about whether to buy a new car, or a second-hand model (bearing in mind how quickly the value of a car depreciates once it’s driven off the forecourt). You also need to factor in all the costs associated with owning a car, such as petrol, insurance, road tax, and servicing. 

Top tips for buying a second-hand car

Before parting with any cash, ask yourself whether you would be better off managing without a car of your own, and using public transport more frequently. Equally, if you only need to use a car some of the time, think about signing up to a car club or lift-sharing scheme as this should also work out a lot cheaper.

Want to talk to a GP today? With Saga Health Insurance, you have unlimited access to a qualified GP 24 hours a day, 365 days a year. Find out more about our GP phone service.