A new ‘flexi-retirement’ trend is emerging with more retirees deciding to work part-time or in the gig economy, according to a new report launched today from abrdn.
Two thirds (66%) of people retiring in 2022 don’t plan on giving up work completely. This compares to just over half (56%) of those who retired in 2021 and a third (34%) of 2020 retirees.
In its second ‘Class of’ report, surveying 2,000 UK adults, abrdn reveals how the Class of 2022 plan to spend their time and money in retirement. The report also identifies how prepared they are for what’s to come and how factors such as the rising cost of living and the pandemic are affecting their plans.
When it comes to their work plans, there is a significant trend towards ‘flexi-retirement’. A quarter (24%) of the Class of 2022 will go part time with either the same job or a new one, one in six (15%) will continue to work for their own business, and just over one in ten (12%) plan to become entrepreneurs and start their own business.
The main reasons cited for ‘flexi-retirement’ include needing the income (31%) and wanting to keep busy (32%).
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 the Class of 2022 who plan to reduce their hours or get a part-time job in retirement, less than three in ten (28%) have taken financial advice about this decision. Just a quarter (25%) are aware of the potential tax implications around dipping into their pension while still working and still saving more into their pension.
Dyer continued: “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. A financial adviser can help assess what people need to think about and what steps to take as a result – ultimately giving them the confidence to proceed with their plans to secure their future in a way that suits them.”
The research also looked at responses from individuals who retired in 2021 on how their first year of retirement had unfolded. More than half (56%) have continued to work and two fifths (41%) of them 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’ – working for companies such as Deliveroo and Uber.
abrdn’s ‘Class of’ report also found that just a quarter (25%) of this year’s retirees feel very confident they have saved enough to fund their retirement – compared to nearly a third (30%) of the Class of 2021.
The rising cost of living is likely to be a key factor in this drop in 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. And for some this could be out of their hands – for one in five (20%) their main source of income is their State Pension, which is currently struggling to keep pace with inflation.
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 – not even friends or family.
“Lots of people are not seeking any professional help with their retirement plans, and with the current pressures of the cost-of-living crisis, this could put them in an incredibly vulnerable position. 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”, Dyer concluded.