Pandemic pushes nearly half a million into early retirement
The Office for National Statistics (ONS) has released two data sets:
- Movements out of work for those aged over 50 years since the start of the coronavirus pandemic
- Reasons for workers aged over 50 years leaving employment since the start of the coronavirus pandemic
According to the ONS data sets:
- 493,000 individuals aged 50 and over have left the labour market, stopped working or actively looking for work, as a result of COVID.
- Prior to the pandemic, the proportion of over 50s who were economically inactive had declined steadily.
- Those aged 60 years and over were more likely to be funding their retirement or time out of work from a private pension (66%) than those in their 50s (29%).
- Retirement is the most frequently given reason for leaving work during the pandemic (47%), with those age 60 or over more likely to report this (58%) than those in their 50s (28%).
The question, for those leaving the labour market early, is will their savings last sufficiently long to allow them to fully enjoy their later retirement? Average life expectancy at age 50 is around 84 for a man and 87 for a woman; meaning the chances of running out of money in retirement are high. The corresponding figures for 60-year-olds is the same; it is only the 1:4 and 1:10 ages showing a difference.
For those who can afford to, delaying accessing their pension will also give their retirement fund more time to grow and thus potentially increasing the level of sustainable income, not just from the additional growth but from the shorter time it needs to last.
For individuals leaving the workforce, it is important for them to check their State Pension entitlement they have thus far accrued. They may well need to make Voluntary NICs, either Class 2 or Class 3 to ensure they are entitled to the full State Pension at age 67.
‘Can I afford to retire?’ is a question which regularly comes up in meetings with clients, and if reliance on savings and pensions is taking place years before originally planned pre-COVID, having a robust and carefully managed retirement strategy is essential.
For more information about retirement planning and how our expert advisers may be able to help, click here to watch back our retirement webinar, ‘Planning a comfortable, not taxing retirement?’, take a look at our ‘Approaching retirement guide’, or get in touch with your TPO adviser.
To see if you can afford to retire, why not try out our Retirement calculator.
The information in this article is correct as of 21/04/2022.
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