One in two older workers are aiming to phase their retirement amid concerns about their retirement finances, according to new research.
In its 2024 Global Benefits Attitudes Survey WTW founds that 55 per cent say that a retirement plan is more important than ever.
The global advisory and broking firm also found that many older workers were putting these plans into action, with 17 per cent of those aged 50 or over already reducing their working hours or job responsibilities, while a further 32 per cent plan to do so as they near their retirement date.
WTW found that most of these employees want to transition into retirement over a relatively long period of time. For example, those who started phasing into retirement at age 56 expect to work for a further 10 years. The survey found similar results for workers who want to phase into retirement when they are older.
Most workers who are currently phasing have reduced their work hours (75 per cent) or job responsibilities (31 per cent).
Slightly fewer want to change to a different role or job in their industry or change where or how they work. When asked what was driving their decisions about when and how to retire, the top reason was financial security (68 per cent) followed by their health (61 per cent) and having more time for family, leisure and travel (56 per cent).
Interest in phased retirement comes at a time when four in 10 (39 per cent) of workers aged under 50 expect to work past age 70 — a sharp rise from the 27 per cent that said this when this survey was taken two years ago.
Additionally, eight in 10 workers (79 per cent) admit they aren’t saving as much for retirement as they should be, and less than half (47 per cent) report being on the right track to retirement.
The survey found that over half of employees (55 per cent) said their employer-provided pension is more important than ever, with 70 per cent saying it is the primary way they save for retirement. Additionally, four in 10 (41 per cent) cited their pension as an important reason to stay with their current employer.
WTW head of defined contribution consulting Helen Holman says: “Phased retirement can be a win-win for both employees and employers.
“Working fewer hours even with reduced pay can help employees transition into retirement both financially and emotionally. At the same time, companies want to hang on to experienced employees and encourage them to pass on their wealth of knowledge to younger employees. Still, most employees think their employers can do a much better job of leveraging the skills of older workers.”
The survey found only 30 per cent of respondents rate their employer as effective at using the skills and knowledge of older workers. Meanwhile two-thirds of employees (66 per cent) believe it’s important to be a mentor and to help train less experienced colleagues before they retire.
Holman adds: “These findings show that employees are recognising they might need, or want, to re-think when and how they retire to balance all their needs in later life, including financial.
“Employees working later in life can be an opportunity for employers to retain valuable skills and experience but might also present a challenge. What’s clear is that employees still consider their employer’s pension scheme as their primary savings vehicle for retirement and more can be done to ensure better outcomes from these.
“Paying more into pensions will improve member outcomes but that clearly comes at a cost for both employees and employers. Whilst increasing costs might be challenging, some employers might prefer to invest in employees’ retirement provision now, rather than bear the cost of an ageing workforce later.”