ANNOUNCEMENT: UK Adviser is now PA Adviser. Read more.

Retirees go back to work to cover pension shortfalls

After they were forced to shield during pandemic rather than top up their retirement income

|

The number of Brits over the age of 70 returning to work is rising, research by financial advisory firm Salisbury House Wealth (SHW) has found.

According to data by the Department for Work and Pensions (DWP) around 481,000 of over-70 are currently working – a 6% increase in the past year.

The figure for 2020 was approximately 452,000, as older workers were asked to shield during the height of covid, as per government guidelines.

The current numbers, however, still mark a huge decline from pre-pandemic levels where there were approximately 578,000 over-70s in employment.

The advice firm said that many older people are employed in sectors where remote work is not possible, such as retail and social work, and this resulted in financial losses in 2020, especially for those with low pension savings.

Financial Conduct Authority (FCA) data suggests that the average pension pot in the UK is £62,000 which is significantly lower to the sums needed for a comfortable retirement. According to consumer publication Which? they should be around £155,000 for couples and £192,000 ($257,100, €224,240) for single households.

SHW said that a shortfall in pensions and savings “will have serious consequences on an individual’s standard of living” and “in some cases, they may find themselves having to continue working part-time during retirement in order to boost their income”.

Gender differences

Tim Holmes, managing director of Salisbury House Wealth, added: “Being forced to shield during the pandemic was a huge setback for over-70s who relied on working to top up their retirement income.

“The past year of lockdown will have been a wake-up call for many people – encouraging them to focus more closely on their long-term finances. Investing into pensions early on and making regular contributions, will give individuals greater flexibility once they reach retirement age.”

The DWP figures also show that more men have returned to work than women.

There are currently 299,000 employed men over the age of 70, a 26% increase from 2020; whereas the number of older women going back to work has fallen by 15% to 182,000.

SHW suggests that fewer women may have held roles in sectors that have started to bounce back 18 months after the first lockdown.

Holmes said: “Some older workers remain in the workforce by choice, particularly to remain connected to the community. However, for others, it will be a necessity to boost their pension pots.

“Shortfalls during retirement could force individuals to compromise on their dream retirement plans or may even put retirement out of reach for some. Making a conscious effort to build a good savings buffer will be key to avoiding this.”

Latest Stories