For many, early retirement may seem ideal. Who wouldn’t want to spend less time working and more time with their friends and family? However, if the person retiring early has not been given the choice and was instead forced into retirement, how ideal really is it?
The problems with forced early retirement
Since the pandemic, at least 500,000 people from ages 50 to 70 have left the British workforce. In many cases, they were forced into retiring earlier than they had wanted. As the cost-of-living crisis continues to rear its head, many of these people may experience severe problems when it comes to having enough income to fund their retirement.
While not ideal, being forced into an early retirement by pandemic-related causes may not be as much of an issue for those who can afford it. However, data is indicating that this surge in early retirement is due in part to ill health. This is a cause for concern because it will greatly impact the living standards of those retiring. In addition to this, it will consequently create a significantly reduced economy for society at large.
Of course, it does not help that the world is going straight from a pandemic into a cost-of-living crisis. Older demographics are largely feeling these effects. Energy prices will rise significantly in the next month. This jump is said to be equivalent to over a month’s worth of the mean state pension. Pensioners typically spend a larger percentage of their income on heating their homes than younger demographics. This makes them some of the most at risk when it comes to rising energy costs.
It is also being reported that an even steeper increase in energy bills will occur in October. If this is to be the case, retirees will not be able to rely on their pensions as their main source for living expenses. Instead, they may need to pull from their savings and investments.
Older workers were made redundant at a higher rate than those from other age groups. Additionally, once they became unemployed, reports show that older workers found it more difficult to re-emerge into the workforce. History supports this trend. Studies have shown that when older people leave work for an extended period, they are not likely to return. Additionally, many who have expressed that they would like to return to work are claiming that they have experienced age discrimination during their search for a new job.
While we do not yet know the full extent of the consequences of mass early retirement, it is apparent that there are dangers that may arise for these people later in life. As inflation skyrockets, the state pension will struggle to keep up. The Centre for Economics and Business Research is predicting that it will rise by 3.1%. However, inflation may increase prices by 8.7%. This will cause millions of pensioners to lose hundreds of pounds over the upcoming months. If inflation does reach the high of 8.7% and the state pension only increases by £289 per year, it will cost pensioners over £2,000 more a year on their outgoing payments.
A new future for working conditions
For decades now, people have worked well into their 50s or longer. The pandemic has reversed this trend and caused employment numbers to plummet. This has been attributed to several different factors. The UK’s Office for National Statistics (ONS) reported that health concerns and new work patterns were causing older workers to revaluate their life choices. Specifically, their careers. It is estimated that close to a fifth of workers between the ages of 50 and 59 attribute quitting their jobs to mental health issues. A sixth said they were seeking a lifestyle change.
The ONS data shows that three in five workers over the age of 50 left their jobs earlier than they had planned since the start of the pandemic. Apparently, 15% attribute their resignations or early retirements to COVID-19 and 13% to either disability or illness.
Many are referring to this mass exodus as The Great Resignation. Individuals who do want to return to work may now be looking for more flexible working conditions. These include providing employees with the ability to work remotely and making changes to their hourly requirements to accommodate other personal responsibilities. Experts are arguing that companies must take this more flexible approach. It encourages employment and ensures they are not contributing to forcing older people out of their roles. Of course, though, new working conditions may not be sufficient in gaining back the one in six over-50s who lost their jobs during the pandemic.
Fortunately, unemployment in the UK has dropped from the 5.2% pandemic-high to now 4.1%. As of January of this year, the EU’s unemployment rate was at 6.2%, with Czech Republic having the lowest rate and Greece having the highest. This is an improvement from January 2021, where employment had reached 7.5%.
It is because of instances like this that it pays to start planning early. Private Client Consultancy can help make your money work for you. Contact us today.