18th December 2014
Changes in life expectancy, individual economic circumstances and government legislation have caused a seismic shift in the way people now retire in the UK a new report has concluded.
The analysis from peer-to-peer lending platform Zopa and Consumer Intelligence identified a new shift towards so-called ‘pre-tirement’ whereby finishing work for good in the UK is no longer a single event but a gradual process which takes place over a period of years or even decades.
The report stated that ‘pre-tirees’ are individuals in their 50s, 60s and even 70s who ease themselves gradually into retirement by reducing their working hours in favour of other interests such as volunteering, childcare, studying or exercise.
Setting up their own business, changing career and travelling more frequently were other typical traits of those in pre-tirement, although many also continued to work – both paid and unpaid – well beyond the state retirement age. In addition it found that Britons are choosing to cut back on their working hours earlier in life, with one third of 50-54 year-olds saying that they had already begun to do so.
Almost half, at 49%, of those surveyed agreed that retirement is now a more fluid process than it was in the past, and one in five or 21%, did not or does not want to stop working as soon as they reach 65.
In the study of more than 2,000, 50-80 year-olds, it found 17% of those aged over 65 said that they remain in paid employment, while a further 30% do unpaid work. However, only 17% of those who continue in paid work do so due to financial necessity, with 27% saying they work to keep their mind active, 16% to keep busy and 11% to stay healthy or physically active. Although those of retirement age earn significantly less on average, those working are more likely to command top wages; 3% earn over £75,000 per year, compared to 2% of 55-64 year-olds and just 1% of 50-54 year-olds.
The report underlines how confusion around shifting retirement ages is affecting those approaching the end of their working lives. A massive 89% of 50-54 year-olds said they don’t know for certain at what age they will retire, whilst 35% said they expect to retire later than they had originally planned. More than half of 50-64 year-olds believe that changes to the state pension age are making the retirement process more confusing, and 28% said they will need to retire later as a result. Worryingly, just 24% of those aged 55-64 said they would be financially secure if they had to retire immediately, while only half of those aged over 65 were confident that they would be.
Giles Andrews, CEO and co-founder of Zopa, said: “Retirement in Britain is no longer an event that involves clearing your desk at 65. Having a more fluid retirement process is a result of many of us being fitter and healthier later into our lives, not wanting to simply down tools at age 65 or being unable to afford to stop working completely. On the other hand, many are choosing to improve their work: life balance by cutting their working hours earlier in life. The pre-tirement trend is a seismic shift in the way Britons think about retirement. It will require many of us to review our own financial situations much earlier in regard to how we will support ourselves when we choose to stop working full time.”