One in eight older workers have changed their retirement plans as a result of the coronavirus crisis and a third said their financial situation had worsened, according to research by the UK’s Institute for Fiscal Studies.
The think-tank’s findings follow the release of government data showing that the pandemic has already halted a decade-long rise in the number of over-50s in employment, raising concerns that older workers who fall out of work could struggle to re-enter the labour market and find themselves poorer in retirement.
The IFS found that 8 per cent of workers in their 50s or older planned to retire later than they had intended. This was more common among homeworkers, suggesting that for some, the shift away from offices had made it easier to keep working.
But it was also more common among people with defined contribution pensions who had reported a fall in their wealth, indicating they were facing up to the necessity to work longer to make up the shortfall.
The IFS also found that 5 per cent of older workers planned to retire earlier than expected, with the proportion higher among richer households and among workers who had been furloughed, which could reflect a lack of confidence about finding a new job if they were made redundant.
A significant minority of those over the age of 66, who were in work before the onset of the virus, had already retired, with at least some of them bringing forward their plans.
“That’s OK where it’s a positive choice, but for many it won’t be and will leave them poorer,” said Emily Andrews, senior evidence manager at the Centre for Ageing Better, which funded the research. She added it was “deeply worrying” that furloughed workers were eyeing early retirement.
She called for the government to put in place support targeted at older workers — to match that extended to young people through the Kickstart scheme — in order to send “a strong message . . . that over-50s are just as entitled to jobs as younger workers”.
The IFS found that about a quarter of employees over the age of 54 were furloughed in June to July, with a fifth of the remainder working shorter hours. The disruption to older self-employed workers was even greater, with a third not working and only a fifth of the remainder saying they were able to continue as normal.
People in their late 50s, and those with a health condition or disability, were the most worried about job security. Almost a third of older workers said their financial situation had worsened and they were far more likely than those already retired to be worried about their future finances.
Heidi Karjalainen, a research economist at IFS, said many were not well placed to withstand a shock to their income, with a quarter of those who had already suffered a drop in income reporting net household wealth of less than £500 per person.