A third of people hitting retirement age this year do not plan on giving up work completely, a new report from abrdn has found, reflecting the need for a more holistic approach to retirement than in the past.
The ‘Class of 2022’ report said a new ‘flexi-retirement’ trend is emerging with more retirees deciding to work part-time or in the gig economy.
Nearly a quarter (24%) of those surveyed plan to go part time at either their current or new employer, while 15% will continue to work for their own business. In addition, 14% plan to do some volunteering and 12% have said they will start their own business.
A need for income (31%) and wanting to keep busy (32%) were the main drivers behind choosing flexi-retirement, abrdn said.
Colin Dyer, client director at abrdn Financial Planning, said: “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.”
Of those planning to reduce their hours or get a part-time job in retirement, less than three in ten (28%) have taken financial advice about the decision and just a quarter (25%) are aware of the potential tax implications around dipping into their pension while still working and saving more into their pension.
Dyer commented: “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.”
The report also looked at those who retired in 2021. More than half (56%) have continued to work and two fifths (41%) have decided to seek financial advice on the matter. A third (32%) of 2021’s retirees who are still working have joined or are planning to join the gig economy.
The findings suggest a drop in confidence around retirement savings, with just a quarter of this year’s retirees feeling very confident they have saved enough to fund their retirement, compared to nearly 30% of the Class of 2021. One in five of this year’s class of retirees have less than £100,000 in their pot, while the average pot is around £385,000.
Abrdn said the rising cost of living is likely to be a key factor in the drop of confidence, with more than a quarter (27%) of the Class of 2022 saying they don’t know how to mitigate the impact of rising inflation on their retirement income.
Four in five (82%) of the Class of 2022 have not sought any professional advice about their plans to retire this year, with one in ten (9%) admitting they’ve not spoken to anyone about it, including friends or family.
Dyer added: “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.”
[Main image: anthony-metcalfe-QQsRTGAZp9o-unsplash]
