Half will work over a decade in retirement

older employees at B&QJohnny Green/PA Archive/Press Association Images

New research has been published today, which reveals that over half of all people will be forced to work for up to 11 years after their official retirement age, in order to make ends meet.

So why is this happening, and what does it mean for retirees?

The problem

The research, sponsored by a consortium of Age UK, the Actuarial Profession, Aviva and Partnership found that the root of the issue is that people are simply living longer, and retirement income cannot keep pace.

Niki Cleal, PPI Director, said: "In the last three decades, life expectancy has increased dramatically in the UK. On the whole this is good news for individuals, but it also means that many people will need to save more and work longer if they want to have an adequate retirement income."

Michelle Mitchell, Charity Director General of Age UK agreed: "Lower annuity returns and other factors mean that more and more people will have to work past their state pension age - and often for many years - if they are to have enough money to live comfortably."


The researchers started with the basic minimums. They calculated that the bare minimum income in retirement needed is £11,000 a year. The good news is that they discovered that 85% of those who are over the age of 50 and under state pension age right now will have the savings and pensions to be able to afford this. The bad news is, as they said: "For many people an income in retirement at this level is unlikely to be considered adequate."

They then investigated the proportion who would have enough cash to replicate the standard of living they had during their working life. They found a lucky 40% were in this position. They added that a further 10% of the over-50s might have sufficient state and private pension income to replicate working life living standards, if they continue to work and save for between one and five years after their State Pension Age.

However, they discovered that for a significant minority, this is a pipe dream. Cleal said: "A further 45% would have to work and save for 11 years or more beyond their State Pension Age to replicate their working life living standards in retirement."

The solution

The report concluded: "This demonstrates that many people need to start saving more today, if they want to avoid having to work much longer than they planned and want to have an adequate retirement income in the future."

Plus, of course, this current generation of retirees is far more likely to have generous occupational pensions than those retiring in a decade or more's time. It means we need to do more ourselves, as soon as possible.

Clive Bolton, 'at retirement' director at Aviva added: "In 2004 the Pensions Commission stressed that people would need to both save more and work longer in order to supplement the state provision. The PPI's study underlines this fact. We recommend people approach retirement with a clear picture of their financial needs and that they take a holistic view of all of the assets at their disposition, in order to manage the transition into later life."

Barriers to work

However, working into your 70s is easier said than done. The findings come in the wake of the latest unemployment statistics from the ONS which show older people are among the biggest victims of the UK's economic crisis. The latest figures show that the number of unemployed women aged 50-64 is up 27% on this time last year - a significantly bigger increase than any other age group. The ONS figures also show that there are now 118,000 people aged 50 plus in the UK who have been unemployed for two years or more - a 45% increase (37,000) on this time last year.

Mitchell added: ""The government must work to encourage employers to hire and retain older workers, and to provide training for those who need it if we are to avoid creating future generations of people in later life struggling to make ends meet."

It means that for millions of people 'retirement planning' becomes an issue of considering what you will be able to do in retirement to earn extra cash, and working to develop those skills so you can find work that's lucrative enough to live on. Because while we cannot be sure of anything in this current environment, the one thing you can rely on is that things aren't going to get any easier.

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