Today’s labour market data shows that the number of people aged 16-64 who now say they are retired has fallen to 1,110 in November-January 2023.
That’s a drop of 7% in the number of early retirees (people aged 16-64 who say they’ve retired) in the last six months from 1,196 (May-Jul 2022), with around 90,000 re-joining the workforce.
It suggests that cost of living pressures driving ‘The Great Unretirement’ could be persisting into 2023 and coupled with the market volatility, which has affected the value of many people’s pension savings, may challenge more older workers to give up the early retirement dream.
Combined with a growing cohort of defined contribution pension savers reaching retirement with typically smaller pots than their defined benefit counterparts and the expectation of longer lives, the early retirement dream may fade over the coming months according to Stephen Lowe, group communications director at retirement specialist at Just Group.
“The cost of living crisis and market volatility are likely to have contributed to driving a number of early retirees back into the workforce over the past year,” he said.
“Those who may have felt able to retire before claiming the State Pension will have seen their household budgets squeezed as everyday items soared in cost. At the same time, many will have seen turbulence in the financial markets hit the pension savings and investments they were relying on to bridge the gap between giving up work and receiving the State Pension.
“The hard realities of how tricky it is to make a defined contribution pension last securely for a full retirement will have been brought home to many, and as defined benefit pensions disappear from the private sector this challenge will only grow for the UK’s workforce. These defined contribution pensions will also be expected to last longer as longevity nudges upwards.
“Tomorrow’s Spring Statement may bring measures designed to attract workers back to the labour market, including a possible acceleration of the State Pension Age. This change would see UK workers faced with the stark choice of either working longer or working out how to fill the financial gap until they get their State Pension.”