Changes to the State Pension age and the cost of living crisis have seen poverty rates among 65-year-olds more than double, according to The Institute of Fiscal Studies and a subsequent report by Restless, a digital community and advocate for people aged 50 and over. This development could be a sign of more things to come for freelancers and contractors when it comes to their retirement planning and the growing trend of “unretirement.”
The growing trend of unretirement
Around 700,000 65-year-olds had to wait an extra year before they could claim their State Pension due to the State Pension age increasing from 65 to 66 between 2018 and late 2020, and as a result, missed out on around £142 a week during this period.
The absolute income poverty rate of 65 years olds at the end of 2020 rose by 14 percentage points to 24% or around 100,000 people. The absolute income poverty rate is defined as the proportion of people with an income of less than 60% of the average inflation-adjusted income in any year.
Increases to the State Pension age are set to continue until 2028 when it will reach 67 for both men and women, which will likely mean freelancers and contractors may have to work for longer.
This has meant that economic activity levels amongst people aged over 50 are at their highest levels since the pandemic began as older workers start to ‘unretire’, according to Rest Less.
Rest Less analysed the latest labour market data from the Office of National Statistics and found that economic activity levels – a measure of people in work or looking for work – amongst people aged over 50 are now at 10,974,000 – their highest level since January to March 2020, just before the pandemic devastated the jobs market.
Official labour market data appears to be showing the first signs of a return to the long-term trend of more economically active people aged over 50 – a decades-long trend which was reversed by the pandemic*.
Increased economic activity driven by over 50s
Rest Less’s analysis shows there was an increase in economic activity of 116,000 amongst workers aged over 50 in the past year (March-May 2022 versus March-May 2021). Driving more than half of the total increase were men aged over 65 (whose economic activity levels increased by 66,000 – or 8.5% in a year). Economic activity levels amongst women over 65 increased by 37,000 – an increase of 6.8%. Economic activity levels amongst those aged 50-64 increased by 0.13%.
Going back to work: it’s not the same for everyone
Rest Less also consulted qualitative data from the Office of National Statistics, issued in March 2022, which asked more than 12,000 50–70-year-olds who were not currently looking for work if they would consider going back to work in the future. One in three (33%) 50–64-year-olds and one in 10 (10%) of 65+-year-olds said they would.
Rest Less ran a poll amongst 500 of its retired members to confirm the trend: 32% of retired Rest Less members in June 2022 said they’d consider returning to work at some point or that they were already working again after retirement.
Of the respondents who said they would consider going back to work, 32% said they’d return for the mental and social stimulation, 12% said they’d return because of increases in the cost of living and 8% said to top up their pensions. Perhaps unsurprisingly, 47% said it would be a mix of all of these reasons.
“Older workers have been leaving the jobs market in their droves over the past two years, partly due to many re-evaluating what they want from their lives and careers during the course of the pandemic but also due to the devastating impact the pandemic has had on the prospects for many older job seekers, who felt they had no choice but to leave the workforce,” said Stuart Lewis, Chief Executive of Rest Less.
“In some ways, the pandemic forced the hands of many and gave them an opportunity to trial retirement,” said Lewis.
He continued, “One member in his 60s decided to retire when the care home he was working in closed during the pandemic. Two years later, he is missing the social interaction that comes with work and is back on the job hunt.”
An early retirement can often seem like a dream when you’re stuck in the thick of the daily grind but for many, giving up work abruptly can also result in a loss of structure, social connections and purpose which can leave people feeling lost at times. For example, we often forget just how much of our social network and contacts come from the work environment.
Stuart Lewis, Chief Executive of Rest Less
Many people nearing or in retirement are also concerned about how volatile financial markets will affect their investment portfolio.
“At the same time, with spiralling inflation and volatile financial markets impacting pension funds, some people who thought they could retire comfortably during the pandemic are now having to unretire and find work again to bring in some extra income and top up their pensions whilst they still can,” said Lewis.