ONS: Why older workers have changed their retirement plans
Sarah Coles, personal finance analyst at Hargreaves Lansdown, comments on ONS’s publication a study of older people during the pandemic, which shows why older workers have changed their retirement plans.
Key points from the study:
- 1 in 8 (13%) workers aged 50 and over have changed their retirement plans as a result of the pandemic: 5% will retire earlier and 8% will retire later.
- Those on furlough were most likely to have changed their plans, but were evenly split on earlier (10%) and later (9%) retirement.
- Those who were working from home were more likely to say they planned to work later (11% compared to 5% of those not working from home).
- During the crisis, the employment rate of workers aged 50 and over fell from 73% to 71%, and for those aged 65 years and over fell from 12% to 10%.
- Older workers made up over a quarter of those on furlough.
Sarah Coles commented:
“The pandemic has forced a re-think of retirement among older workers, and while they’re evenly divided between those who plan to retire earlier and those who want to retire later, in many cases the reason is the same: they don’t have any other options.
“Many older people have been hit hard financially by the crisis, so they want to work longer to make up the cash. More older workers were furloughed or lost their jobs than those in the middle of their careers, and a larger proportion work for themselves, so took a substantial hit. They may have had to pause pension contributions, or dip into their pot, but either way there’s ground to be made up.
“While a boom in early retirement plans sounds more positive, in many cases it’s also the result of a lack of choice. Almost a third of older workers on furlough thought their chances of keeping their job when furlough ended was 50:50, and losing your job at this age means a far higher chance of long-term unemployment. Some will be retiring earlier purely because they can’t find another job.
“There are, however, some more positive reasons for wanting to retire later. Most older people were unable to work from home during the pandemic, but among those who were, 11% plan to work later in life. This may well be because they realise they could manage at work for longer if they had more flexibility to balance their work and home life.
“Whatever your age, it’s well worth revisiting your retirement plans, so you’re a step ahead of any crisis. It’s a good idea to check your pension savings, and use an online pension calculator to see whether you’re on track for the retirement you want at the age you expect. If you do this regularly throughout your career, it gives you far more options if your circumstances change. It means you have a chance to increase contributions, or tweak your investments to boost your pension, rather than simply having to work for longer.”
Kindly shared by Hargreaves Lansdown
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