A new study from the Institute for Fiscal Studies (IFS) has tracked the retirement patterns of those in their 50s and 60s, comparing the year 2002-03 and 2018-19. Their conclusion is that early retirement is:
“Increasingly the preserve of the wealthy as the less well-off are either forced to carry on working to make ends meet or are forced out of the labour market by ill health.”
The research, conducted with the abrdn Financial Fairness Trust, found that for those aged 55 to 64 years in 2002-03:
- 20% in the poorest fifth had retired early voluntarily
- 28% for the wealthiest fifth had retired early voluntarily
This changed radically by 2018, when:
- Only 7% of the poorest fifth were retired
- 24% of the wealthiest fifth were retired
Health not wealth?
Ill health played a big part in the decision to retire, or at least, not to continue working. The study showed that in the 2018-19, 39% in the poorest fifth were neither working nor retired. In stark contrast the percentage of the same age group in the middle fifth income bracket who were employed rose from 59% to 76%.
“One of the most remarkable changes of the last 20 years has been the big increase in the numbers of people on average levels of wealth who carry on working until their mid-60s, and this is not simply due to increases in the state pension age. These people often don’t have the financial security to retire – for example, many have an outstanding mortgage.”
“Among people aged 70-74, the employment rate was 15% for the richest fifth, compared with 11% for the middle fifth and 6% for the poorest fifth. The thinktank said this was consistent with existing research showing those working beyond state pension age often did so because they enjoyed the work or wanted to keep active, rather than out of financial necessity.”
Reducing your hours
Of those still working beyond state pension age:
- 45% of men and women still working at 74 work fewer than 16 hours per week
- 50% of men and 41% of women still working at age 74 are self-employed
“Some people use part-time work as part of a gradual shift towards retirement. Moving into part-time work is more common for people with high levels of education and living in less-deprived parts of the country. …Of full-time workers approaching retirement and observed between 2002 and 2018, 30% make a transition to part-time work over that period.”
Others decide to keep going full-tilt, perhaps through necessity:
“Many men working at age 66 still work full-time (around 60% at least 30 hours); this declines gradually to about a third working full-time by age 74. In contrast, the fraction working much shorter hours (fewer than 16 hours per week) rises from 18% at age 66 to 45% at age 74.”
Work and retirement; striking the balance
I meet people every day who are approaching retirement and are genuinely concerned about stopping work. It’s not about the money, but everything else it gives them; a routine for their day, the social contact, a clear sense of identity, and much more.
In other words, it gives them a sense of purpose. However, that doesn’t mean retirement should be the opposite. Far from it. My job (and mission in life!) is to help people like you Retire With Purpose
What do I mean by that? Do you have a reason to get up in the morning?
To retire with purpose, you need to first work out who you want to be in retirement, not just what you want to do.
With my help, you can effectively replace your current work identity with a new ‘retired’ you that:
- Has an active social life
- Is interested in and engaged with the world
- Leading a healthy and active lifestyle
- Enjoying time spent with partners, family and friends
What’s more, those I work with can usually achieve all this without financial worry through careful planning and knowing what they want from the next 30+ years of their life.
So, if you want to hang up the work clothes and ditch the commute at any age, call me. Or if you want to be one of those 45% still blending work and retirement aged 74, call me too!
My sole aim is to help you plan for and create your own retirement with purpose, and what that retirement looks like is as individual and unique as you are. It’s not an instant fix, but with 1-to-1 bespoke coaching with me over an agreed timescale, you can plan a smooth transition into a retirement that ticks all the boxes for you.
To discuss your goals, plans, dreams and (yes) financial provision for retirement: