Early retirement options post-pandemic

Nearly a year on since the UK went into its first Covid-19 lockdown, the latest statistics from the Office for National Statistics (ONS), combined with a study from provider LV, have suggested thousands of people aged 55 and above have been leaving the full-time workforce since the coronavirus crisis began.

But while they are bringing forward their retirement, other plans they had been making for the first few years of retirement have had to be pushed back thanks to the pandemic. And, with early retirement, the world of work and its associated stresses may be behind them – but it is a big financial decision that will mean more than simply putting some plans on hold, as commentators have warned.

Latest figures from the ONS have revealed a rise in the numbers of older people leaving the workforce, marking a reversal of the trend for more older people to remain in employment after 65. In January, the ONS figures showed:

• Since February 2020, the number of payroll employees has fallen by 828,000
• The claimant count increased slightly in December 2020, to 2.6m; according to the ONS, this includes both those working with low income or hours and those who are not working
• Its labour market figures for the three months to November 2020 also found the biggest drop in unemployment after 65 was among women
• The fall was approximately 11% – equating to 71,000 women – and the largest drop for any age group aged 18 and over

This suggests that rather than continuing to seek jobs, women are more likely than men to slip into retirement with whatever pension savings they have. As the ONS issued its statistics, life and pensions provider LV published the results of its quarterly Wealth and Wellbeing Monitor, which is a study of 4,000 UK adults. Its findings have indicated that more than 154,000 people aged 55-64 have opted for early retirement because of redundancy and reduced income, a desire to reduce their risk of exposure to Covid-19 or the pandemic has made them reassess their priorities in life. The LV research (among those who were still working at the start of 2020) revealed:

• 3% (154,000) of those aged 55-64 have taken early retirement due to Covid.
• 6% (313,000) of those aged 55-64 say they will retire later than planned to save more for retirement.
• 4% (211,000) people aged 55-64 have accessed some of their pensions savings to supplement their income because they have been made redundant or their earnings are reduced.

Moreover, the vast majority of those surveyed have not researched how much they might need to live on in retirement, while few have checked the value of their pension pots in the past year, the study found.

If you are considering early retirement, or have recently retired and need some advice, please contact us here.

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Source: Techlink