New research from Rest Less suggests that the employment rate for people over the age of 65 has reached a record high. A study by the digital community, which campaigns on behalf of older workers, found the number of economically active people aged 65 and over has also reached record levels.
The report discovered that the economic activity levels among people aged over 65 has passed 1.5million for the first time since comparable records began in 1992, taking the employment rate of the over-65s to 12 per cent, the highest it has ever been.
Stuart Lewis, chief executive of Rest Less, said: “The rapid increase in the number of over-65s either in work, or looking for work is a significant long-term trend driven by the UK’s ageing population, recent increases to the State Pension age and a desire to stay active and purposeful in later life.” He added: “Sadly, for some, it has also been accelerated to some extent by the current cost of living crisis.”
Something Age UK has seen a rise in as it warned a ‘great un-retirement’ could be getting underway, as rising living costs force people to change their later life plans and return to the workplace. The charity said it is continuing to hear from older people whose retirement aspirations "are being ruined by the impact of inflation".
One person told the charity: "I had to take early retirement in May 2022 to help care for my mother with dementia. Due to increases in fuel and all utilities I have been forced to get a part-time job to supplement my work pension."
Another person said: “The only time my family used the heating during last winter was at Christmas. I am working but my wages would not cover the cost of heating my house and leave enough to buy food and cover the other bills that are also rising. I am due to retire in September 2024 but unless there is a big change, I cannot see this being possible."
Age UK also pointed to Office for National Statistics (ONS) figures indicating that 1.1million people under the age of 65 were retired between February and April 2023, down from 1.2million during the same period a year earlier.
Caroline Abrahams, charity director at Age UK, said: "The cost of living crisis really is driving a coach and horses through many older people's retirement plans, especially those without much money behind them.
"There's growing evidence that some are having to postpone retirement because they don't have enough money coming in to pay the bills. Others who thought they could leave work for good and did so, partly in reaction to the pandemic, are having second thoughts and returning, but it's usually too late for them to make up the shortfall in their pension contributions."
She added: "As the cost of living crisis continues to exact a heavy toll, we think the UK Government needs to provide more generous financial support for people who cannot keep working until they become eligible for their State Pension, as well as increasing access to training and flexible working for those who can, thereby reducing the level of economic inactivity, which is one of their big goals. Policies like these would make a big difference to this age group and help our economy too."
A survey by Opinium for Age UK in January found that among 60 to 65-year-olds, 9 per cent said they or someone else in their household had recently had to change their work habits. This included, for example, returning to work, working longer than expected or delaying retirement, in order to boost their income, the survey of 2,700 people aged 60-plus found.
The charity said some people leaving the workplace may instead take money from their pension pot, reducing the amount they will have left later in life.
John Adams, senior policy analyst at the Pensions Policy Institute (PPI), said: "Modelling undertaken by the PPI for Age UK shows that when people leave work before their planned retirement age, they have to find money to replace their earnings income. Pulling money out of pension savings early could have serious consequences for retirement income, through pot reduction.
"Additionally, those leaving work generally cease making pension contributions and miss out on the value of those they and their employer might have made had they stayed in work, and any investment returns they could have accrued.”
He explained: “For example, leaving work two years before the planned retirement date may require someone to find around £25,500 in order to meet the target replacement rate to replicate living standard of a person earning £18,500 a year, over that time plus an additional £3,000 to cover pension contributions foregone."
Research by the People's Pension suggests that nearly half of non-retired people think they will still be working beyond the State Pension age, with 7 per cent fearing that they will never be able to retire.
Phil Brown, director of policy at People's Partnership, provider of the People's Pension, said: "It's clear that the cost of living crisis, and the uncertainty this is causing means that many people are rightly concerned about their retirement prospects. The financial resilience of many people in this country must be improved and one way of doing this is to enable automatic enrolment to reach its potential."
A Department for Work and Pensions spokesperson said: "We are providing significant support to help with rising prices - worth an average of £3,300 per household over this year and last and to help people make informed choices about their financial futures, free advice is available through our Pension Wise and Money Helper services.
"We also continue to help over 50s who can work to do so through our Midlife MOT, 'Returnerships' and Skills Bootcamps, backed by a £70million investment."
To keep up to date with the latest State Pension news, join our Money Saving Scotland Facebook page here, follow us on Twitter @Record_Money, or subscribe to our newsletter which goes out Monday to Friday - sign up here.
READ NEXT
Older people making a new claim for DWP income top-up could be due an extra £300 this autumn
Full list of benefits older people can no longer claim when they reach State Pension age
Six groups of older women may be due State Pension back payments of up to £11,500
Check your State Pension forecast online to see how much you are due in retirement
People over State Pension age can claim up to £600 winter heating bill help from September
