Ryan FowlerNew research from Standard Life reveals that almost half (47%) of those aged 18 to 24 intend to work part-time in retirement, compared to just 17% of current retirees who chose to wind down work. Standard Life’s analysis demonstrates that working 3 days a week from age 66 to 70 could add an extra £88,000 to a pension pot.
The analysis indicates that gradually easing into retirement by working 1, 2, or 3 days per week for a few years after the age of 66 can significantly boost pension savings. For instance, someone who began working on a salary of £25,000 per year and paid the minimum monthly auto-enrolment contributions (5% employee, 3% employer) from the age of 22, could have a total retirement fund of £434,000 by the age of 66. Working 3 days a week from 66 to 70 could add £87,000 to their pension pot, while working 1 day a week could add £71,000. These figures are not adjusted for inflation.
Dean Butler, managing director for retail direct at Standard Life, said, “People’s approach to retirement is shifting, with many preferring to gradually ease into retirement by reducing working hours rather than suddenly stopping work altogether. Younger generations perhaps realise that the onus will be on them, rather than their employer, to ensure they have enough to live in throughout later life and retirement. As pension policy has evolved, individuals now have much more responsibility for funding their own retirement which may mean working for longer, whereas older generations have largely benefited from Defined Benefit (DB) pensions which have provided financial security and allowed many to immediately move into full retirement.”
Catherine Sermon, head of public engagement and campaigns at Phoenix Insights, Phoenix Group’s longevity think tank, commented, “Part-time work can be a game changer for those who want or need to remain in work after state pension age, offering the flexibility for people to continue to earn and work while managing other life or health needs. Financially, there are huge benefits from maintaining an income from work as it means people may be able to reduce how much they take from their retirement savings each month or delay taking any out at all. For some, it may even mean they can continue to save and boost their retirement pot.
“The ‘hard stop’ retirement has been superseded by those opting for a gradual transition and it’s likely we’ll see a rise in people who will never fully retire. Part-time work plays a vital role in this changing approach, but we need to ensure we address the barriers people face accessing reduced hours working, especially later in life.”
The findings highlight a significant shift in how future generations view retirement, with a focus on maintaining financial security and flexibility through part-time work.
