OVER half of Scots retiring this year say they do not plan on giving up work completely, sparking a new ‘flexi-retirement’ trend amidst pension saving fears during the cost of living crisis.
The surge of Scots pensioners deciding to continue working comes as only one in four of this year's retirees feel very confident they have saved enough to fund their retirement.
A new analysis has revealed the people who could have retired, have decided to continue to work part-time or in the gig economy.
Some 59% do not want to give up work entirely, compared to just over half (55%) of those who retired in 2021 and a third (33%) of 2020 retirees, according to the Class Of 2022 report by Scots investment firm Abrdn, formerly Standard Life Aberdeen.
When it comes to their work plans, there is a significant trend towards ‘flexi-retirement’. Almost a quarter (22%) of the those due to retire in Scotland in 2022 will go part time with either the same job or a new one, one in eight (12%) will continue to work for their own business, and just over one in ten (13%) plan to become entrepreneurs and start their own business. Of those who said they were retiring later than planned, the top reason was that they had not saved enough (20%).
The news comes following widespread reports of UK households struggling to make ends meet following high inflation – sending everyday bills such as energy and fuel costs soaring – as the country tries to recover from the aftershock of the Covid-19 pandemic.
Colin Dyer, client director at Abrdn financial planning, said: “Gone are the days when everyone had a set date or a set age from which they’ll never work again. The emerging trend for ‘flexi-retirement’ for financial reasons, or just to keep busy, is here to stay. The Class of 2022 are challenging the norms and doing what works for them.
“Hearing why retirees are choosing to work really underlines the importance of taking a holistic approach to retirement and how sensitive plans can be to external issues, such as the surge in the cost of living or the pandemic.”
The report also found that only over a quarter (28%) of this year’s Scottish retirees feel very confident they have saved enough to fund their retirement – compared to nearly a third (30%) the previous years.
The rising cost of living is likely to be a key factor in this drop in confidence – with more than a quarter (20%) of the Class of 2022 saying they do not know how to mitigate the impact of rising inflation on their retirement income. And for some this could be out of their hands – for one in five (17%) say their main source of income is their State Pension, which is currently struggling to keep pace with inflation.
And almost three quarters (74%) of the Class of 2022 Scottish retirees have not sought any professional advice about their plans to retire this year, with one in ten (11%) admitting they’ve not spoken to anyone about it – not even friends or family.
Mr Dyer continued: “Working in retirement can have wider financial implications, all of which need to be planned for. This can seem complicated, but that’s where preparation and speaking to an expert can help. A financial adviser can help assess what people need to think about and what steps to take as a result – ultimately giving them the confidence to proceed with their plans to secure their future in a way that suits them.
“Lots of people are not seeking any professional help with their retirement plans, and with the current pressures of the cost-of-living crisis, this could put them in an incredibly vulnerable position. More needs to be done to make seeking advice the norm and seeking it earlier to ensure retirees feel confident both financially and emotionally as they approach this new chapter in their lives."
A January study by the trade group, the Pensions and Lifetime Savings Association raised concerns that Scots are not doing enough to save for pensions, with 52% saying they cannot afford to put money away at the moment.
The trade association whose members are involved in designing, operating, advising and investing in all aspects of workplace pensions argues that looking beyond the uncertain economic outlook, the Government should increase the level of automatic enrolment contributions for workplace pensions to ensure that people have an adequate income when they retire.
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