Will you be working late… or forced into early retirement?

· 5 min read

The last few years of at work can be critical in terms of ensuring that we have enough tucked away for our retirement. But the signs aren't good for those keen to remain economically active for as long as possible.


After several decades when employers regularly incentivised older staff to take early retirement, more recent times have seen a marked shift and older workers have helped fuel the steady rise in UK employment figures.

It's been a mutually beneficial trend: on the one hand, the phasing out of generous DB pensions, together with the recalibration of State Pension Age, has made remaining economically active a financial necessity for many employees. On the other, many employers have begun to recognise the value of retaining the experience and “soft skills” built up over a lifetime of working – such as customer handling, problem solving and mentoring – as well as the benefits of having a diverse workforce less inclined to fall foul of “group think”.

But there are worrying signs that this trend hasn't just halted, but gone into reverse… and that could have serious implications for those still concerned about tucking enough away for a comfortable retirement.

Recent ONS data, for instance, showed that 30 per cent of unemployed over-50s have been out of work for at least 12 months, and 20 per cent of them for at least two years. That’s significantly worse than the figures for unemployed under-50s: 20 per cent and 8 per cent respectively. So, if you do find yourself edged out of the door, the chances of getting back in are less than those of your younger counterparts.

Certainly, that’s the perception of older workers themselves: recent research by Legal & General Retail Retirement (LGRR) and the Centre for Economics and Business Research (Cebr) revealed that 52% of job seekers aged over 50 believe their age has made employers less likely to hire them. Amongst job seekers aged 60 – 69, that figure rises to 64%.

Hiring barriers

That perception is backed up by the attitudes of those doing the hiring: in August a report conducted by ProAge and 55/Redefined showed that less than 25% of younger HR professionals said they would be “very willing” or “motivated” to recruit workers over 55.

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Putting to one side the obvious ageism at play here, at a time when (we are being told) we have a skills shortage in this country, putting older people on the scrapheap in their 60s and even 50s will, longer term, have massive ramifications for the nation’s economy: not only will that person be on benefits up until State Retirement Age but be far more likely to require State support into retirement. At a personal level, our later years in employment are invariably when we get the chance to top up or plug holes in our pensions.

The bigger picture…

When the issue of why employers will prefer younger workers to their older counterparts is researched, some common themes regularly crop up: greater likelihood of taking sick leave; lower energy levels; an unwillingness to learn new technology or new skills; higher wage costs… not all of these arguments are actually backed by statistics, while some trends are self-inflicted. For instance, there is plenty of research to show that employers regularly give preferential treatment to younger staff when it comes to training or reskilling opportunities.

Is there a mutually beneficial solution to all this? Actually yes.

One of the most marked employment trends in recent years – turbo-boosted by Covid – has been the move towards more flexible working (including part time, working from home and so on) which allows a much bigger slice of the population to be productively employed… parents, carers, those with disabilities or mobility issues, and – yes – older workers who would sometimes quite happily work fewer hours given the choice.

Enlightened employers such as Aviva and L&G (spurred into action by concerns over a looming skills shortage) have been piloting a concept called “The Midlife Review” in recent years which encourages employers and employees to hold a constructive conversation about how to optimise the employee’s later years at work. It looks at three key issues: the person’s health, their finances (how much do their need to earn for a comfortable retirement) and their role in the organisation. That can mean making use of their skills in a different way (for instance, going into mentorship), reducing hours or fitting them around caring responsibilities.

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The results to date have proved a “win-win”: a more flexible and effective workforce on the one hand; on the other, a more amenable working environment that allows someone in their 50s, 60s and even beyond to continue bringing home the bacon… and saving for their retirement.

You can find out exactly how much you need to save in the years ahead to enjoy the retirement you have planned by going to www.retireeasy.co.uk.

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Pension Times Finance Experts
Pension Times Finance Experts
Written collaboratively by Pension Times’ in-house finance experts.
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