The ‘great unretirement’: Older workers are forced to re-think plans to keep up with rising bills, charity warns
- Charity Age UK said it is hearing from older people who cannot afford to retire
- Read more: Families facing extra £2,900 a year on their mortgage due to rates
Older workers are changing their work plans in a great ‘un-retirement’ as they struggle to maintain their living standards, a leading charity has warned.
Age UK said it is continuing to hear from older people whose retirement aspirations ‘are being ruined by the impact of inflation’.
The charity highlighted Office for National Statistics (ONS) figures indicating that 1.075 million people under the age of 65 were retired between February and April 2023, down from 1.180 million during the same period a year earlier.
It comes as a survey found that nine per cent of 60 to 65-year-olds had been forced to change their work plans as the cost of living continues to rise.
Nearly half of people still in work fear that they won’t be able to retire before the state pension age – with seven per cent frightened they will never be able to stop working.
A survey found that nine per cent of 60 to 65-year-olds had been forced to change their work plans as the cost of living continues to rise (file image)
The charity Age UK said some people leaving the workplace may instead take money from their pension pot (file image)
One person told the charity: ‘Had to take early retirement May 2022 to help care for mother with dementia. Due to increases in fuel and all utilities I have been forced to get a part-time job to supplement my work pension.’
Another said: ‘I have joint problems and I am a carer for my husband who needs to keep warm in winter. I have had to take a part-time job to make ends meet.’
Age UK also quoted another person who told it: ‘The only time my family used the heating during last winter was at Christmas.
‘I am working but my wages would not cover the cost of heating my house and leave enough to buy food and cover the other bills that are also rising. I am due to retire in September 2024 but unless there is a big change, I cannot see this being possible.’
Caroline Abrahams, charity director at Age UK, said: ‘The cost-of-living crisis really is driving a coach and horses through many older people’s retirement plans, especially those without much money behind them.
‘There’s growing evidence that some are having to postpone retirement because they don’t now have enough money coming in to pay the bills.
‘Others who thought they could leave work for good and did so, partly in reaction to the pandemic, are having second thoughts and returning, but it’s usually too late for them to make up the shortfall in their pension contributions.’
She added: ‘As the cost-of-living crisis continues to exact a heavy toll, we think the Government needs to provide more generous financial support for people who cannot keep working until they become eligible for their state pension, as well as increasing access to training and flexible working for those who can, thereby reducing the level of economic inactivity, which is one of their big goals.
‘Policies like these would make a big difference to this age group and help our economy too.’
A survey by Opinium for Age UK in January found that among 60 to 65-year-olds, nine per cent said they or someone else in their household had recently had to change their work habits.
Read more: Families facing extra £2,900 a year on their mortgage as the impact of interest rate rises deepens
This included, for example, returning to work, working longer than expected or delaying retirement, in order to boost their income, the survey of 2,700 people aged 60-plus found.
The charity said some people leaving the workplace may instead take money from their pension pot, reducing the amount they will have left later in life.
John Adams, senior policy analyst at the Pensions Policy Institute (PPI), said: ‘Modelling undertaken by the PPI for Age UK shows that when people leave work before their planned retirement age, they have to find money to replace their earnings income. Pulling money out of pension savings early could have serious consequences for retirement income, through pot reduction.
‘Additionally, those leaving work generally cease making pension contributions and miss out on the value of those they and their employer might have made had they stayed in work, and any investment returns they could have accrued.
‘For example, leaving work two years before the planned retirement date may require someone to find around £25,500 in order to meet the target replacement rate to replicate living standard of a person earning £18,500 a year, over that time plus an additional £3,000 to cover pension contributions foregone.’
Phil Brown, director of policy at People’s Partnership, provider of the People’s Pension, said: ‘Our research shows that nearly half of non-retired people think they will still be working beyond the state pension age, with seven per cent fearing that they will never be able to retire.
‘It’s clear that the cost-of-living crisis, and the uncertainty this is causing means that many people are rightly concerned about their retirement prospects.
‘The financial resilience of many people in this country must be improved and one way of doing this is to enable automatic enrolment to reach its potential.’
A Department for Work and Pensions spokesperson said: ‘We are providing significant support to help with rising prices – worth an average of £3,300 per household over this year and last and to help people make informed choices about their financial futures, free advice is available through our Pension Wise and Money Helper services.
‘We also continue to help over 50s who can work to do so through our Midlife MOT, ‘Returnerships’ and Skills Bootcamps, backed by a £70 million investment.’
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