More retirees are opting for part-time work or working in the gig economy, creating a new ‘flexi-retirement’ trend, according to abrdn.
Abrdn outlines how the ‘Class of 2022’ plans to spend their time and money in retirement in its second ‘Class of’ research, which polled 2,000 UK adults. The survey also examines how well-prepared they are for the future, as well as how issues like rising living costs and the pandemic are affecting their plans.
The study found that two-thirds of those retiring in 2022 do not intend to stop working totally. This compares to well over half or 56 per cent of those retiring in 2021 and 34 per cent of those retiring in 2020.;
There is a considerable tendency towards ‘flexi-retirement’ when it comes to their work schedules. Nearly one-quarter of the Class of 2022 will work part-time in the same or a different position, one-sixth or 15 per cent will continue to work for their own company, and just over one-tenth or 12 per cent plans to become entrepreneurs and establish their own company.
The most common reasons for ‘flexi-retirement’ are a necessity for income as well as a desire to stay active.
Less than three out of ten or 28 per cent of the Class of 2022 who plan to reduce their hours or obtain a part-time job in retirement have sought financial assistance. Only a quarter of people are aware of the potential tax consequences of taking money out of their pension while still working and saving more.
The study also looked at comments from those who retired in 2021 about how their first year of retirement went. More than half of those surveyed or 56 per cent have continued to work, and two-fifths or 41 per cent have decided to seek financial guidance. A third or 32 per cent of seniors who are still working in 2021 have joined or want to join the ‘gig economy,’ which includes companies like Deliveroo and Uber.
According to abrdn’s ‘Class of’ report, only a quarter of this year’s retirees are extremely certain that they have saved enough to fund their retirement, compared to nearly a third or 30 per cent of the Class of 2021.
With more than a quarter or 27 per cent of the Class of 2022 admitting they don’t know how to offset the impact of growing inflation on their retirement income, the rising cost of living is likely to be a big factor in this loss in confidence. And for some, it may be out of their control: one in every five people or 20 per cent rely on their State Pension, which is currently struggling to keep up with inflation.
Four out of five members of the Class of 2022 or 82 per cent have not sought professional counsel on their plans to retire this year, and 9 per cent have not spoken to anyone about it, including friends and relatives.
abrdn client director Colin Dyer says: “Gone are the days when everyone had a set date or a set age from which they’ll never work again. The emerging trend for ‘flexi-retirement’ for financial reasons, or just to keep busy, is here to stay. The Class of 2022 are challenging the norms and doing what works for them.
“Hearing why retirees are choosing to work really underlines the importance of taking a holistic approach to retirement and how sensitive plans can be to external issues, such as the surge in the cost of living or the pandemic.”
Dyer added: “Working in retirement can have wider financial implications, all of which need to be planned for. This can seem complicated, but that’s where preparation and speaking to an expert can help. A financial adviser can help assess what people need to think about and what steps to take as a result – ultimately giving them the confidence to proceed with their plans to secure their future in a way that suits them.
“Lots of people are not seeking any professional help with their retirement plans, and with the current pressures of the cost-of-living crisis, this could put them in an incredibly vulnerable position. More needs to be done to make seeking advice the norm and seeking it earlier to ensure retirees feel confident both financially and emotionally as they approach this new chapter in their lives.”