Those who retired early are being forced back into work due to cost-of-living pressures according to new research.
Workplace pension provider People’s Partnership and asset managers State Street Global Advisors have released the latest results from ongoing longitudinal research, which has followed a group of savers up to and into retirement since 2016.
This ‘New Choices, Big Decisions’ study shows a number of those who took early retirement have returned to the workforce. This is due to having insufficient savings to cope with the rising cost of living – and in some cases because they missed the working environment.
However, the study shows that those returning to work tend to opt for part-time or flexible hours, and typically in low-stress roles that are close to home, to reduce commuting times.
The study shows that while these older workers want the structure and a sense of value that work brings, their new jobs are often very different to their previous careers.
The Office for National Statistics (ONS) latest labour market figures show that the number of older people returning to the workforce remain above the post-pandemic low.
The research also highlights the importance of the state pension to those with private retirement savings, with some of those who took part in the study admitting they had to appreciate its importance, having originally dismissed it as a ‘pittance’.
Alistair Byrne, head of retirement strategy at State Street Global Advisors, commented: “This wave of research takes place in a very different economic environment, with a cost of living crisis created by high inflation and markedly higher interest rates forcing retirees to rethink their approach.
“The results reinforce our view that for many people, a guided retirement income product that provides flexible access to the pot in the early years of retirement, along with a stable, guaranteed-for-life income in the later years, will be a valuable approach.”
People’s Partnership director of policy Phil Brown says: “The fact that an increasing number of early retirees are returning to the workplace suggests that some have realised that their pension savings won’t stretch as far as they had hoped. It’s a reminder of how important retirement planning is and that so many savers need support when it comes to how they access their pension pot.”
Previously published findings from the study revealed that retirees still aren’t considering the impact that inflation has on their pension savings. The report recommends that stress testing planning tools offered by financial service providers should provide a greater focus on inflation protection. It also says that pension providers should look to strengthen the information they provide on inflation in their customer information and education resources.