LOADING

Cost-Of-Living Crisis Pushes UK Retirees Back to Work

by Tanya November 20, 2024

The cost-of-living crisis has led to a sharp increase in older workers returning to the job market.

People are delaying retirement, especially in the UK.

Rising inflation, stagnant wages, and soaring living expenses have made it increasingly difficult for people to save adequately for retirement, leaving them with no choice but to return to or remain in the workforce.

A growing crisis for pension savings

A recent study by Senior Capital revealed that 32% of people in the UK have been unable to contribute to their pensions due to financial pressures.

The average pension pot needed for a modest retirement lifestyle has surged by nearly 60%, from £68,300 in 2020–2021 to £107,800 in 2023–2024. These figures highlight how out of reach retirement has become for many workers.

Another survey Rethinking Retirement by Chums revealed that feeling financially insecure is the No. 1 reason for continued working after retirement.

The rising costs of housing, food, and energy have significantly increased the amount required for a basic retirement.

Data from the Centre for Ageing Better shows that the percentage of people over 65 working full time has grown from 25% in 2000 to 34% in 2023. For most, this is a matter of financial necessity, for others, it’s a response to the boredom and lack of purpose they experience in retirement.

Many older workers are taking on flexible, part-time roles closer to home. These jobs often differ significantly from their previous careers, offering lower stress and more manageable responsibilities.

Changing attitudes towards retirement

Today, nearly half (42%) of UK savers expect to work past the retirement age of 66, with 65% planning to take on part-time work during retirement.

Technological advances, remote working opportunities, and the gig economy have blurred the lines between working life and retirement, leading many to view this stage of life as a gradual transition rather than an abrupt stop.

The challenges facing older workers

For many older individuals, remaining in the workforce is not straightforward. Ageism in the workplace can make it difficult for people in their 50s and 60s to find meaningful work.

Far too many people are forced out of work because the workforce doesn’t recognise their value or because their health/stamina/energy levels are no longer good enough.

Reverse mentoring bridges the gap between older and younger workers. It capitalises on the unique strengths of each generation by recognising that both younger and older employees can learn from each other, older people possess business acumen and tricks of the trade and younger people understand digital technology and new-age consumers.

We need a cultural shift in how older workers are perceived and supported.

Employers’ role in retirement planning

Employers have a crucial role in helping their employees prepare for retirement.

Some companies are taking steps to improve pension contributions. Several FTSE-listed companies like BP and Unilever now offer contributions of up to 20–25%, allowing employees to decide how much to allocate toward their pension versus immediate income. However, these benefits are often unavailable to younger workers or those in lower-paying roles.

Gen Z and retirement

The cost-of-living crisis isn’t just affecting older generations. Younger workers, particularly Gen Z are also struggling to save for the future. A study by Robert Walters revealed that 21% of professionals under 27 are not saving for retirement at all, and a further 33% are contributing only the statutory minimum to their pensions. Rising living costs and stagnant salaries mean that many are prioritising immediate financial needs over long-term savings.

Neglecting pension contributions now could lead to a postponed retirement later in life. Even small contributions, like 4% of your annual salary, can grow over time with employer matches, creating a solid foundation for retirement savings.

Summary: rethinking retirement for a new era

The financial pressures on individuals of all ages underscore the need for innovative solutions, including more flexible retirement income products, enhanced employer support, and greater public awareness about the importance of long-term financial planning.

For many, the idea of a leisurely retirement funded by decades of savings is no longer realistic. Instead, part-time work and phased retirements are becoming the norm.

Social Shares

Never miss a post!

Unsubscribe any time

Tanya

The first Millennial blogger in the UK. Twitter @_luckyattitude

Related Articles

Leave a Comment

Your email address will not be published. Required fields are marked *