Nearly one-in-ten Britons aged over 55 have either returned to work after retirement or are actively seeking employment due to financial pressures.
More than a quarter of those who have “unretired” report their pension income is insufficient to live on, while over a third cite increased living costs as the primary reason for their return to work.
There is a growing trend of retirees being forced back into employment due to financial pressures.
Retirees are facing financial pressure, as new data reveals that 34 per cent of those going back to work say it is because of higher living costs. Additionally, 27 per cent found that their pension savings aren’t enough to maintain their lifestyle.
The research also revealed that 43 per cent of “unretirees” want to earn additional money to afford more treats during their retirement years.
Standard Life’s analysis suggests that a gradual transition into retirement, rather than an abrupt exit from the workforce, could help retirees better manage these financial pressures.
Their research suggests that a more flexible approach to retirement, such as gradually cutting back on working hours, could help retirees better balance their financial and social needs.
The study also highlights that part-time work can substantially boost retirement savings.
Someone starting work at age 22 on a £25,000 salary could accumulate £193,000 in their pension pot by age 66, assuming minimum auto-enrolment contributions.
Working just one day per week between ages 66 and 70 could add £21,000 to their retirement fund. This increases to £27,000 for those working three days weekly during the same period.
The benefits come from both delayed pension access and continued contributions, with figures adjusted for inflation. These calculations suggest that even minimal continued employment can provide substantial financial advantages for retirees.
Mike Ambery, Retirement Savings Director at Standard Life, emphasises that while money isn’t the only factor, it’s a significant one driving people back to work.
“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,” he said.
He also explained that with fewer people having guaranteed pensions, it’s crucial for workers to stay engaged with their pension savings throughout their careers.
Being aware of how much one is saving and whether it will be enough for retirement can help people plan better. Ambery also suggested considering annuities to guarantee part of retirement income, as rates have increased.
He predicts that more people will move away from the traditional full retirement and instead reduce their hours or work part-time, which can both boost savings and help them adjust to life after work.
Catherine Foot, Director of Phoenix Insights, warns that over-50s face significant barriers when returning to work. She said: “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.”
Retirees are also returning to work for social reasons, not just financial ones.
About 38 per cent of those going back to work said they felt bored in retirement, and 20 per cent mentioned loneliness as their main reason.
These social issues, along with financial challenges, are changing how people approach retirement.
Research by Standard Life suggests that a more flexible retirement—like slowly reducing working hours—could help retirees manage both their finances and social needs.