Why fewer people are working beyond their State Pension age

When do you plan to retire?

Early retirement is a common financial planning goal for many, with ‘early’ often defined by reference to the State Pension age.

According to new research, the number of workers who expect to keep working beyond State Pension age is in decline.

The research from Canada Life found that only 51% of people plan to continue working beyond State Pension age, down from 71% last year.

It’s the first year that the number of people who plan to keep working beyond their State Pension age has fallen since Canada Life started this research in 2015.

Accelerating retirement plans appear to be driven by a variety of factor, including rising levels of unemployment and redundancy.

The impact of the Covid-19 pandemic appears to be bringing retirement plans forward too, encouraging more people to stop working when they reach the State Pension age of 66.

Paul Avis, Canada Life Strategic Propositions Director, Group Insurance said:

“For some older workers, the events of 2020 have helped them realise they want to spend more time at home, with their families and learning new skills and hobbies. Whereas for others, poor health and vulnerability may – sadly – have accelerated their retirement plans.

“While unemployment continues to rise, job losses may be another contributing factor to this drop in the number of people planning on working beyond retirement age, especially for those receiving or expecting redundancy payments.

“However, the shape of retirement is changing and so are the wants and needs of those approaching the next phase of their lives. We are witnessing a huge shift in the retirement time horizon as society changes and adapts to a new norm, and these changes are only accelerating due to the pandemic.”

According to the research, 16% of people who plan to keep working into their late sixties don’t expect to retire until after they have turned 75.

Motivations for working beyond State Pension age vary and include social and financial factors.

42% of those surveyed said their pension pot is not sufficient to support their desired lifestyle in retirement, while 22% say they will carry on working because they enjoy the routine.

21% said they feel unprepared for retirement and 20% simply enjoy their work, so want to keep going.

Looking at the millions of older workers who plan to continue working beyond their 66th birthday, 37% say they are worried their health will limit their ability to work.

24% of older workers are worried they will be treated differently in the workplace, because of their age, with their boss or colleagues perceiving them as ‘old’.

Nearly a third are also concerned that continuing to work will make their health deteriorate, and 31% are worried that working later will mean they can’t enjoy their old age.

Paul Avis, continued:

“Older workers sit at the heart of our economy and they are an invaluable resource for thousands of employers with the kind of experience and expertise that only comes with time.

“While on one hand, we can take the positive from 2020 that it has helped some older workers realise there is more to life than just work and reset their priorities, many organisations will feel the impact of experienced employees leaving the workforce.

“Employers have a significant opportunity to support employees’ health and wellbeing and so, for employers that are seeking to increase workforce productivity and engagement, group risk and other health-related benefits will increase in importance.”

Sources:
Canada Life

The information contained in this blog post does not constitute advice or recommendations. You should seek independent financial advice before acting on any information on this website.