The research among over-65s who had either given up work completely or semi-retired highlights the significant numbers who are forced to quit full-time work by circumstances outside their own control. It also suggests a worsening problem with 45% of the 66-70 age group saying they were forced to step back earlier than they wanted compared to just 26% of over-80s.
“People are being urged to think about working for longer but our research shows that the decision isn’t always in our own hands,” said Stephen Lowe, group communications director at Just Retirement.
Of those who were forced to stop working full-time earlier than they wanted, 38% said it was due to ill-health and a further 15% due to not physically being able to continue. Nearly one in five women (19% compared to 5% of men) made the decision because a family member needed support such as nursing care.
More than one in five (22%) were made redundant and could not find another job and nearly one in 10 (9%) said they were offered another role by their employer they no longer felt able to do. Fewer than one in 10 (8%) said they had worked for a company with a mandatory retirement age.
“We wanted to know more about what triggers people to give up full-time work,” said Stephen Lowe. “While it’s good to know a majority stop at a time they choose for themselves, there is a significant minority who felt circumstances forced them into the decision.
Overall, people had hoped to retire at an average age of 61 but actually achieved it at 63, although 61 often marked a turning point when some stepped back to part-time working.
Starting to draw State Pension was the primary reason for retirement in 35% of cases, while 24% said it was because they could access their private pension. Only about one in five (21%) said they retired because they had reached the point they felt financially secure enough to take a step back from work. One in 10 said that paying off the mortgage was the trigger, and a similar number said it was because a partner had retired.
“We found that in more than half of cases where people were forced to give up work earlier than they wanted, the decision had a long-term financial effect on their standard of living with 13% saying that it cut 20p or more from each pound of retirement income they had expected, 8% by 10p-20p per pound and 7% by up to 10p.
“People said it forced them to rely on a partner’s pension more than they wanted to (6%), or that they had to fall back on other assets (7%). Very few – only one in 100 – said they had increased the investment risk they were taking to make up the shortfall which suggests they were cautious with the assets they have rather than making speculative investments that might not pay off.”
He also said the research drew attention to the fact that nearly half of retirees (47%) did not take any steps to determine how ready they were for retirement. One in five (21%) had identified how much State Pension they would receive, while a slightly smaller number (18%) had reviewed their savings and investments to see how much they had.
But only 17% had made a budget plan to identify how much income they needed to live on and only one in ten (11%) had spoken to an independent financial adviser.
“Many of those we questioned retired when their choices were more limited than they are today and the majority will have focused on taking the maximum tax free cash they could, then using the rest of the pension to generate income,” said Stephen Lowe.
“The new pension freedom rules allow people to balance the income they want against having flexible access to the capital in a pension or leaving it untouched for estate-planning purposes. Still the first priority has to be income to pay the bills, but it is a far more complex environment and it’s in retiree’s interests to budget carefully and to explore all the options taking the free guidance that is on offer from Pension Wise and perhaps seeking professional help.”
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