One in seven retirees returning to work as financial pressures and social needs drive them to unretire

id

• Almost one in ten (9%) retirees aged over 55 have unretired or are actively looking for work – with a further 6% considering doing so
• A third (34%) have gone back to work due to increased living costs, while more than a quarter (27%) found their pension was not sufficient to live off
• Standard Life analysis highlights how gradually easing into retirement by working a few days a week after the age of 66 can significantly boost a pension pot, and help people prepare for the reality of retirement

One in seven retirees are returning to work or are considering doing so, with financial pressures, a lack of pension provision and desire for social connection driving this, according to new research1 from Standard Life’s Retirement Voice report.

7% of retirees aged over 55 have already gone back into work, with a further 2% actively looking for employment. Another 6% say they are considering going back to work too.

Income-related factors have driven a significant number of over 55s to unretire and re-enter the workforce. Over a third (34%) have found their living costs have increased while 27% have realised their pension is not providing enough income to live on. Meanwhile, over two in five (43%) want to earn more money so they can treat themselves more in retirement.

Others that have gone back to work post-retirement cited social reasons, with 38% feeling bored, and 20% feeling lonely.

Winding down work could help people better cope with retirement financially and socially

With many retirees returning to work because of their finances, Standard Life’s analysis² suggests that gradually easing into retirement by winding down work could provide an alternative to today’s cliff-edge retirement model, while improving finances adding a significant amount to the overall value of a pension pot.

For example, someone that began working on a salary of £25,000 per year and paid the minimum monthly auto-enrolment contributions (5% employee, 3% employer) from the age of 22, could have a total retirement fund of £193,000 by the age of 66 – in real terms, adjusting for 2% inflation a year. However, someone that worked 3 days a week from the age of 66 to 70 could add £27,000 to their pension pot. Working just 1 day a week for a few years after reaching retirement age could add as much as £21,000 to a retirement fund - £18,000 from fund growth due to delaying starting to access pension savings from 66 to 70, and £3,000 due to the additional contributions of working one day a week. These figures are adjusted for inflation.

Impact of working past retirement age

*if beginning working with a salary of £25,000 per year and paying 5% monthly employee contributions and 3% employer contributions into a workplace pension at the age of 22 and assuming 3.5% salary growth and 5% investment growth per year. Figures are reduced to take effect of a 2% inflation assumption. Annual Management Charge of 0.75% assumed. The figures are an illustration and are not guaranteed. Earning limits not applied.

Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group commented: “Money isn’t the only reason people return to work after retiring - but it certainly seems to be a big factor. Recent retirees couldn’t have foreseen the cost-of-living issues that have squeezed their retirement incomes, and many are now being forced to rethink their plans and return to work to supplement their income.

“Fewer people currently saving for retirement have gold-plated employer pensions, guaranteeing a set income in retirement, with more of us having to consciously engage and manage our own arrangements. It’s therefore vital for today’s workers to take an interest in their pension throughout their careers. Being aware of how much you’re saving now and if it’s likely to grow to be enough for you in retirement is just one simple step that can help people prepare for their desired retirement and take steps to better prepare their finances for when they eventually stop working. It might be worth those thinking about how to take their pension money, and make it last, considering guaranteeing all or part of their retirement income via an annuity - particularly as annuity rates have risen over the last couple of years. This could be a good way of ensuring that the basics are covered.

“In future it’s likely that more people will shun the traditional cliff edge retirement and instead gradually reduce working hours or take on part time work. The good news is that in addition to boosting their pension savings, they can also begin to experience the day-to-day reality of life outside the workplace.”

Catherine Foot, Director of Phoenix Insights adds: “Returning to work can be hugely beneficial for over-50s when it comes to earning, saving and the sense of purpose it brings. While some have enough finances to retire early out of choice, many fall out of work in their 50s and 60s due to reasons such as caring responsibilities or ill health and plan to return as soon as they are able. Phoenix Insights found the average total wealth for a 50-64-year-old out of work due to ill health is just £57,000, less than 5% the wealth of those who retire early out of choice (£1.24 million).

“However, the over-50s face significant barriers to re-entry. This is primarily due to a lack of opportunities and insufficient provision of good quality flexible work that people working later in life desire. Being out of work before state pension age is a major driver of pre-retirement poverty, so it’s critical the government and employers to better support this group to remain in employment. Providing access to flexible work is one of the most important factors to enabling this.”

ENDS
 

 

Enquiries

Notes to editors

[1] Ipsos Mori conducted research among 6,000 UK adults. Fieldwork was conducted between July and August 2024. Data was weighted post-fieldwork to ensure the data remained nationally representative on key demographics.

[2] Calculations assume the following:

Figures are reduced to take effect of inflation.

Calculations are intended only for the sole purpose of providing an illustration regarding the projection of savings and pensions. They should not be used with the intention to give an accurate representation of real-world outcomes.

 

About Standard Life

• Standard Life is a brand that has been trusted to look after peoples’ life savings for nearly 200 years
• Today it proudly serves millions of customers who come to Standard Life directly, through advisers and through their employers’ pension scheme.
• Standard Life is part of Phoenix Group, the largest long-term savings and retirement business in the UK. We’re proud to be building on nearly 200 years of Standard Life heritage together
• Our products include a variety of Pensions, Bonds and Retirement options to suit people’s needs, helping our customers to invest and save for their future. We’re proud to offer a leading range of sustainable and responsible investment options.
• We support our customers on their journey to and through retirement with comprehensive, easy-to-understand guidance so they can invest in the right way for their needs, and plan a future they feel confident about.
• Standard Life is the proud headline sponsor of Race for Life, Cancer Research UK’s flagship fundraising event series.