Over a third (36%) of people in their 60s who have not yet retired say they will need to work longer as a direct result of the State Pension age rise, according to new research from the Standard Life Centre for the Future of Retirement.
The research also finds that nearly two in five (38%) of 60-65-year-olds are working for longer to cover day-to-day expenses, showing that financial pressures are a major factor behind the increase in later-life working, alongside those who continue working by choice.
And these figures may increase if reported plans to raise the State Pension Age to 68 more quickly are implemented. Currently it is due to gradually rise to 68 between April 2044 and April 2046, affecting those born between April 1977 and April 1978.
However, the possibility of an acceleration of in SPA rises was highlighted after reports that Treasury officials have told the Office for Budget Responsibility (OBR), the government’s fiscal forecaster, that the “current policy” is to bring the increase in the retirement age forward by at least seven years, to 2037.
This comes against a backdrop of widespread under-saving in the UK, with over 15 million people not saving enough for retirement.
Catherine Foot, Director of the Standard Life Centre for the Future of Retirement, comments: “Working later in life can offer real financial and social benefits, particularly when it reflects personal choice. Yet for many people, this isn’t a lifestyle decision but a financial necessity. Millions across the UK are unable to retire when they want, underlining the challenge of retirement adequacy and the need for longer working lives just to bridge the gap.”
Following the State Pension age starting to rise to 67 in April, over a third (37%) of 60-65-year-olds who are still working say they are delaying retirement until they can receive the State Pension, with the State Pension comprising a significant proportion of most people’s retirement incomes. Previous Standard Life research also found that one in six (16%) retirees have either gone back to work (8%) or are thinking of doing so (8%)3, as the inadequacy of their retirement finances becomes clear.
These findings underline the growing pressure on retirement plans. While the Pensions Commission’s interim report highlights the need for longer working lives, it also makes it clear that the system must adapt to modern, more flexible ways of working if this is to be fair and achievable.
Catherine Foot continues: “To make working in later life as accessible as possible, we need expanded, age-tailored careers support, alongside better flexible work arrangements and improved access to in-work health support. However, many will not be able to continue working, even with better support. This is particularly true for those with long-term health conditions and unpaid carers, who are financially disproportionately affected by the rise in State Pension age. Alongside improving wider pensions adequacy, the government must set out a clear plan to ensure the most vulnerable are supported before and during retirement, mitigating the negative impact of further changes to the State Pension age on their financial security.”
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