Over 23 million UK employees to work beyond the age of 65 as rising costs and poor returns on savings begin to bite

Nearly three quarters (71%) of UK employees – equivalent to 23 million people1 – are set to work beyond their 65th birthday, according to new research from Canada Life Group Insurance. Of those, two in five (37%) believe they will reach at least their 75th birthday before they retire.

The proportion of those who intend to work beyond the age of 65 is up from 61% in 2015 (when Canada Life Group Insurance began tracking this data) and continues a long-term upwards trend as employees stay in work for longer.

Rising prices and poor returns on savings delay retirement

Among those expecting to work beyond the age of 65, seven in ten (71%) cite the rising cost of living as a reason. Food prices in particular have been rising at their fastest pace for more than five years – the result of last year’s extreme weather and an increase in global import costs.2

Despite a fall in inflation over the past year, another two in three (63%) say that rising inflation eating into the value of their savings is an influential factor, while 62% say the same of poor returns on their savings.

Figure One: External factors which make employees more likely to work beyond 65

Rising cost of everyday necessities 71%
Rising inflation eating into the value of my savings 63%
Poor returns on savings 62%
Slow wage growth 58%
Economic uncertainty caused by Brexit 51%

Respondents could select more than one answer

Poor retirement planning plays a role, although some enjoy working longer

A third (32%) of those who intend to work beyond the age of 65 admit that they need to continue earning a wage because their pension savings are insufficient, rising to two in five (39%) among the age group approaching the traditional retirement age of 65 (45-54 year olds).

A quarter of employees (25%) acknowledge that they can no longer rely on a State pension and will have to work for longer to bolster their savings, up from a fifth (21%) last year.

However, not everyone views working for longer as a grim prospect: three in ten (30%) say they plan to work beyond the age of 65 because they enjoy their job, while one in six (17%) employees say they will stay in work to continue receiving valuable employee benefits.

Figure Two: Top five factors why people are planning to work beyond 65

My pension will not be sufficient, so I need to continue earning a wage 32%
I enjoy my job and would like to work for as long as possible 30%
I can no longer rely on a state pension/state benefits 25%
I have saved for my retirement, but the cost of living is so high I will still need a wage 21%
I get other benefits from work, for example, social interaction 21%

Respondents could select more than one answer

In particular, income protection (17%) and life insurance (16%) are highly valued benefits for employees who are considering working beyond the age of 65, while one in eight also appreciate the support of a critical illness cover (13%) and one in ten access to an Employee Assistance Programme (10%).

Paul Avis, Marketing Director of Canada Life Group Insurance, comments:

“It comes as little surprise that UK workers are expecting to work longer. The rising cost of living and poor returns on savings continue to exert pressure on employee’s finances. We found well over a third would consider themselves lucky to retire before 75, never mind the fact that over 70% expect to work beyond 65 for the third year in a row.

“Employers would do well to take note of the growing number of workers planning to work beyond 65 not because of their finances, but because they find their jobs enjoyable and rewarding. These people can be a good influence on the rest of the workforce and employers should look at what cards they have up their sleeves to retain them.

“Income protection and critical illness cover should be at the top of employers’ lists to appeal to an ageing workforce. They are increasingly popular with employees planning to work beyond 65, protecting as they do against ill health and conditions which become increasingly likely with age. With proper planning on employers’ parts, these benefits can be provided with no medical questions for the vast majority of their workforce. They also include a range of support services such as Employee Assistance Programmes and second medical opinion services which can be used by employees of all ages, whether a claim is made or not.”

Author: Editorial Team

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