11/12/17Retirement: Why five million over-50s are planning to keep working instead

Retirement Why five million over-50s are planning to keep working instead

The days of the ‘cliff edge’ retirement are over.

Where you would once be working one day and retired the next, many people are starting to take a more flexible approach to the end of working life.

Research from Retirement Advantage has identified that almost half (49%) of over-50s do not plan to stop working completely when they reach retirement age. In fact:

  • 43% plan to continue working on a part-time basis
  • 6% don’t plan to stop work full time, at all

Either way, the option of continuing to work past the age of 65 is becoming more popular, and will also benefit the economy.

Economic impact

If half of those reaching retirement age during 2017 were to continue working in some way, the economy would benefit from:

  • £1.6 billion from full-time workers
  • £5.4 billion from part-time workers

That is a substantial boost which shows just how major the change in attitude toward retiring ‘on time’ is.

Why keep working?

Rather than financial worries, the three top reasons given by over-50s for continuing to work are:

  • They enjoy working (54%)
  • They like the sense of purpose working brings (53%)
  • Avoiding boredom (52%)

The 41% of people who cited money as a reason for putting off retirement included:

  • 46% of female respondents
  • 37% of male respondents

Of course, with so many over-65s planning to continue working, employers will be faced with the need to change and adapt to an aging work force, and empower them to continue to contribute to their profession in later life.

The effect on pensions

As Pension Freedoms gives over-55s more flexibility, it is inevitable that some people will take advantage of early access to the funds. However, the research also showed that:

  • 37% of people who have accessed cash through Pension Freedoms whilst working have continued to pay into a pension
  • 19% of people who have accessed cash through Pension Freedoms whilst working say their employer has continued to pay into their pension

Unfortunately, 67% of these people are unaware of the effects of the Money Purchase Annual Allowance (MPAA). The MPAA means that those who have accessed their pension fund using Pension Freedoms are limited in the amount they can contribute to their pension after doing so. Currently, this limit is £4,000 per year.

Andrew Tully, Pensions Technical Director at Retirement Advantage says: “People gradually easing into retirement by working part-time may also have taken some of their pension benefits and could find themselves falling foul of the tax rules. Our research shows there is very little awareness of the MPAA which severely restricts the amount you can continue to pay into a pension once benefits have been taken.”

For advice and guidance surrounding your pensions and retirement, get in touch.


Please note:

The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.

Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

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