‘Micro-retirement’ could boost long-term pension savings, says Standard Life

The emerging trend of ‘micro-retirement’ – short, intentional career breaks taken throughout working life – could significantly impact long-term retirement savings, according to new analysis from Standard Life, part of Phoenix Group.

While taking a year off work at age 30 might result in a temporary pause in pension contributions, the analysis suggested that such breaks could encourage individuals to extend their careers, ultimately boosting their retirement funds.

Standard Life’s research showed that someone who began working at age 22, earning £25,000 annually and contributing the minimum auto-enrolment pension contributions (5% employee, 3% employer), could save £163,000 by retiring at age 62.

Taking a one-year break at age 30 might reduce that figure by £4,000.

However, if the same individual worked until age 68 instead of 62, they could retire with a pot of £205,000, an increase of £42,000.

Standard Life’s Retirement Voice 2024 study found that many Brits hoped to retire by age 62, six years before the State Pension age for those retiring after 2044-2046.

Phoenix Insights highlighted that UK workers hold more negative perceptions of work compared to their international peers.

Advocates of micro-retirement argued that shorter, planned breaks can improve work-life balance and overall wellbeing, potentially leading to greater job satisfaction and longevity in the workforce.