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Pensioners return to work as poverty and boredom take their toll
Mounting financial pressures and lack of social interaction have forced 1 million retired people back to work, according to a new survey.
by Michelle McGagh on Mar 23, 2012 at 15:13
One million retired people have found themselves returning to the workforce as low annuity and savings rates and rising living costs mean their pension income won’t cover their expenses.
A survey by annuity provider MGM Advantage revealed 9% of the retired population, the equivalent to one million people, are still in work. A total of 832,000 are aged 65 or over and 278,000 are between 55 and 64.
The retired population is now racking up 300 million hours a year in part-time work, or 5.78 million hours a week. Those holding down part-time jobs are making a significant financial impact, with the value of the work now hitting £2.4 billion a week, or £46.2 billion a year.
Over 70,000 retired people are spending 16 hours or more in part-time work, although the majority work just one or two hours a week.
|Number of hours worked in part-time job per week||Number of retired people working|
|Over 20 hours||28,072|
A number of older people continue to work in retirement because they enjoy their job but an increasing number have to work due to necessity and the financial inability to retire.
Those who have recently retired or are coming up to retirement have seen savings dwindle to nothing due to historically low interest rates and a poor deal on annuity rates, pushed lower by quantitative easing and longer life expectancy.
These factors coupled with the increased cost of living have meant many retirees are not able to afford the retirement they would to live.
Jason Witcombe (pictured), director of Evolve Financial Planning, an independent financial advisory firm in London, said he had noticed more people going back to work in retirement. Many of those were returning by choice because they were bored or wanted a new challenge but ‘there are plenty of people who are doing it out of necessity’.
‘Few people [who work in retirement] need a lot of extra money, they do not need to earn £50,000 a year, sometimes £50 a month makes all the difference,’ said Witcombe.
Witcombe said retiring at 65 was no longer realistic due to increased life expectancy and the pattern of people’s lives.
‘We have to remember that [people in their 30s and 40s] started work after university and will live until their 90s and that is a very different dynamic to previous generations who started work at 16 and worked until 65 and if they lived into their 80s they were doing very well,’ he said.
Witcombe said it was ‘realistic that we have to work longer’ as nowadays people left university with debt that needs to be cleared and got on the property ladder later and consequently cleared property debt later.
‘That doesn’t leave much time until you hit 65, you do not have a lot of time to save. It has not dawned on people how much they need to save just to get £20,000 income in retirement, let alone what they would like to have,’ he said.
David Sinclair of the International Longevity Centre, a thinktank, said people would have to lower their retirement expectations to take into account the economic situation.
‘The expectation has grown that you can now have 20 years watching TV [in retirement] but we cannot afford that anymore. We have people [in society] who could be producing [revenue] who are not and the government is afraid of telling people they will have to work longer,’ he said.
‘There are lots of benefits to people working longer, pensions do not have to be paid out and nor do the different benefits. There is also the tax revenue that comes from [people working].
‘We have got to find a way to communicate to people and have a debate about what people want from retirement and what you should be giving back in retirement.’
Sinclair also noted the psychological and physical benefits of working in older age, and said ‘the quality of life and health in retirement is very significantly impacted by social contact’.
Sylvia Glover, aged 73, can attest to both the financial benefits and health benefits of working in retirement. She retired nine years ago but has worked consistently since. You can read her story: 'My financial life: why I have to work in retirement'.
Working in retirement: what are the rules?
The Equality Act 2010 means it is no longer lawful to retire workers automatically or reduce their hours when they reach age 65, which is classed as age discrimination.
If you retire and would like to continue working the age discrimination laws mean employers cannot overlook you for a position based solely on your age. Neither can they retire or refuse to employ you because of the age of family or friends, which means if you look after your spouse for example, it cannot count against you – known as discrimination association.
The age discrimination rules apply to employment, training and adult education.
More about this:
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