Almost half of UK workers over the age of 50 prefer to transition gradually into retirement by blending work and retirement, according to a new study.
Forty-nine per cent of over-50s workers earning upwards of £20,000 would like to blend work and retirement and favour a phase of ‘pre-tirement’ by adjusting the amount of time they work before giving up work altogether.
Research by pension, insurance and investment company Aegon found a transitional approach was consistently favoured across all income bands. The north-east of England was the only one of 12 regions where the majority of workers did not back this route, at 34 per cent.
The trend away from a traditional retirement, involving full-time work one day and complete retirement the next, has been going on for some time
Steven Cameron, Aegon
The traditional approach to retirement no longer works for today’s employees, according to Aegon. The so-called ‘cliff edge’, where full-time workers give up work completely in one go, is now chosen by 31 per cent of workers over the age of 50.
Aegon’s pensions director, Steven Cameron, said: "The trend away from a traditional retirement, involving full-time work one day and complete retirement the next, has been going on for some time."
Alongside financial considerations, many will see "benefits in continuing to work in a reduced capacity for mental stimulation and social benefits while also freeing up more leisure time", he added.
Employers must adapt
Having an employer that offers flexibility is key for this approach to work. Among workers that would like to transition, 70 per cent would ideally like to adjust by working fewer days, while 44 per cent saw a reduction in the number of hours they work every day as the preferred solution.
A third of respondents wanted more flexible working arrangements, and a fifth were looking for more holiday entitlements while remaining in employment.
Cameron noted the UK’s defined contribution pensions offer huge flexibility in terms of how to draw an income at age 55 onwards. However, those whose main pension is defined benefit do not have access to pension freedoms unless they transfer benefits, a complex decision requiring professional advice.
Some employers have already shown a desire to promote a diverse workforce, and this includes age, with companies such as B&Q actively recruiting older workers.
Cameron added: “UK laws no longer allow employers to set a fixed retirement age, which immediately opens up a degree of flexibility. Clearly, offering flexibility needs to work for both employer and employees, and practicalities may vary between small and large employers, or between different employment sectors with different physical and other challenges.”
