More people delaying retirement amid rising living costs

Financial advisers report a rise in people working for longer

Written in line with our editorial policy.

New research reveals how people approaching retirement have been adapting their later life plans, as the higher cost of living continues to put pressure on the finances of so many.

The survey, carried out by NextWealth for Aegon UK, asked financial advisers what changes they had seen in the behaviours of their clients over the last year as a result of the challenging economic climate.

More than two thirds (68%) of advisers responded that they have seen clients choosing to stay in work for longer, delayed accessing their retirement savings, or both.

In addition, 59% of advisers have seen a rise in the number of clients reviewing either the amount of wealth they intend to pass to the next generation, or when they intend to do it.

A telling sign of the burden imposed by the rising cost of living, 61% of advisers said their clients have been accessing more cash from their savings – though just 4% said this was the majority of their clients.

Despite inflation coming down in recent months, clearly the higher cost of living is influencing key financial decisions being made by people approaching retirement in the UK. 

Could health be compromised by delaying retirement?

Many of us dream of the day we can finally clock out from our career, so thousands of people choosing to postpone that milestone event is no small issue. 

According to analysis last year from the Centre for Ageing Better, more than 1-in-9 (11.5%) people aged 65+ are working in the UK, double the 1-in-20 (5.2%) who were working in 2000. It equates to almost one million more older workers since the millennium.

The same research found that workers aged 65+ are largely self-employed and working part-time, but there is a rise in the number of people remaining in full-time employment up to State Pension age and beyond.

Continuing on the career treadmill past State Pension age can be beneficial for some, for instance those who are in good health and who thrive on the social interactions at work. But for those living with poor health, delaying retirement for financial reasons could be difficult. According to Age UK, 73% of people aged 65 to 74 have at least one diagnosed long-term health condition, with some having two or more.

Alternatives to delaying retirement

If you’ve done the sums and feel your current or future retirement income isn’t enough, there are potentially other ways to boost your finances without having to work longer than you planned.

For instance, if you have more bedrooms than you need in your home, you could rent out a room to earn extra cash for your retirement. Alternatively, you might consider downsizing your home to a smaller or less expensive home. 

If neither of those options suit, then there are borrowing options available for older homeowners such as arranging a remortgage on your property, or a retirement interest-only mortgage (RIO).

Equity release is also an option for homeowners aged 55+ looking for a cash boost. This may allow you to free up the money you need from your home’s value, without having to make any mandatory monthly repayments on the loan. 

Typically, the interest can be left to roll up each month until you pass away or move into long-term care. At that point your plan ends, and the loan and interest are repaid from the sale of your home. If you don’t want the loan to grow in size, there are interest-only plans available too.

Read more about how equity release fits into later life planning.

Could you boost your income with equity release?

If you have concerns about how you will afford to cope financially in retirement, equity release could help you to improve your financial situation without moving from the home you love. 

Before you make a decision, speak to one of our selected specialist advisers. They can explain how a plan works, but also make sure you are aware of some potential pitfalls of this style of lending. For example, equity release will reduce the value of your estate and the amount of inheritance you leave.

To find out how much tax-free cash you could release and check your eligibility, check instantly here, call us on 0808 178 3055 or request a call back.

Sources:

• Clients of financial advisers changing retirement behaviours: Adviser research shows economic environment leading to widespread change in retirement behaviours. Aegon.co.uk. Accessed 7 May 2024.
• Almost one million more people aged 65+ working: Almost one million more workers aged 65 and above since the millennium. Centre for Ageing Better. Accessed 7 May 2024.
• 73% of people aged 65-74 have at least one diagnosed long-term health condition: The State of Health and Care of Older People, 2023. Age UK. Accessed 7 May 2024.

About Clare Yates. With over a decade’s experience writing about later life financial planning, Clare offers a wealth of knowledge about equity release, pension annuities, wills, LPAs and more. When she isn’t writing, Clare likes to spend her time baking and going on walks with her husband, two children and their rescue dog. Follow Clare on LinkedIn