4.5 million over-50s expect to work past retirement age
4.5 million of today's over-50s expect to work beyond their state retirement age by an average of just over 6 years, according to the first Working Late Index, published by insurance, investment and retirement group LV=.
Whilst more than half (55%) of this group expects to work no more than five years past retirement, a quarter (26%) believe they will work five to ten years, and a further one in five (20%) see themselves working well into their 70s or even 80s (10-20 years). Furthermore, the Working Late Index reveals that nearly twice as many women (66%) than men (34%) expect to retire past their state retirement age.
Coming just weeks after the Coalition Government announced that the state retirement age for men and women will rise to 66 by 2020, the LV= Working Late Index finds that the majority (60% or 2.7 million) of late retirees will continue working because they cannot afford to retire otherwise.
In addition, one in ten (10%) late retirees say they will continue to work in the hope that their pension will increase in value. These findings reinforce the issues raised in LV='s State of Retirement report, published earlier this year, which revealed that cash-strapped over-50s had reduced their pensions contributions by almost £18 billion in the last year as a result of the economic crisis.
Back on the job
According to LV='s research, one in five (20% or 4.3 million) over-50s who had retired have since gone back to work; 4% full-time, 10% part-time and 6% unpaid in the voluntary sector. Of those who have taken the U-turn from retirement back to the workplace, a third (34%) said they missed working and 32% were looking for a new challenge. Over a quarter (26%) went back to work because their pension (state and/or personal pension) wasn't enough to support their retirement lifestyle.
Since turning 50, nearly half of those still in employment (46%) have changed the type of work they are doing. Of these, 20% are now doing something less strenuous and challenging, 9% have started their own business, and 4% have moved into voluntary work. But worryingly whether in the same or different type of work, 16% are working longer hours than they did before turning 50.
Ray Chinn, LV= head of pensions, said: ‘'Britain's over-50s have already slashed their retirement savings by nearly £18 billion in the last year, and now it looks like many will have to continue working to ensure they have adequate income in retirement. This is not only because there is not enough in their pension pots, with 9% of over-50s saying they need to maintain an income to financially support their children. It is worrying to see that many over-50s expect to work up to 15 years past the state retirement age, and in some cases are working even more hours than they did earlier in their careers."
Government changes to pensions leaving over-50s feeling worse off
When asked about the impact of the Coalition Government's recent Comprehensive Spending Review, two in five (40%) over-50s said that they expect to have lower savings and income in retirement as a result, compared to just 2% who think they will be better off. While 29% are unsure of how the cuts will affect them.
The Government's change to the state retirement age to 66 from 2020 has left 47% of people in their 50s believing they will be adversely affected. A quarter (26%) said they will now have to retire later than planned, and 21% said they will retire as planned, but as they won't receive a state pension in the very early years of their retirement, they will struggle on a smaller income at the beginning.
Worryingly, the LV= Working Late Index shows that only 12% of the UK's over-50s have always planned to seek advice on their retirement, but a further 7% said they are now planning on seeking professional advice about their retirement as a direct result of recent changes to the pensions system. While 9% had been planning to seek advice but are worried they can no longer afford to do so.
Ray Chinn continued: "Britain's over-50s are continuing to feel the pressure from all angles when saving for retirement so it is not surprising that people are working later into their retirement or returning to work. Some do so through choice of course, but the majority is forced to by their financial situation.
"We urge those already close to retirement not to give up on saving at such a crucial time. These days there are far more financial options available as you reach retirement age, everything from looking at annuity options carefully (including enhanced annuities) to secure a larger retirement income, drawing an income while your pension stays invested, to releasing equity from your home. Expert advice on your financial situation can go a long way and can help plan for a more relaxed retirement."