The number of economically inactive (neither working nor looking for work) people in their 50s and 60s has grown by nearly 250,000 since late 2019.
Research released today (16 June) by think tank the Institute for Fiscal Studies (IFS) found the majority (53%) of this growth in economic inactivity was from retirement.
People in this age group also left the workforce due to ill health (5%), redundancy or dismissal (11%).
As no single other reason exceeded 13% of the growth, they were not seen as a driver of inactivity.
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For many, the move may be permanent as it found just 5-10% of retired people re-enter the workforce.
With a record 1,300,000 job vacancies in the UK, Luke Price, senior evidence manager at the Centre for Ageing Better, said retirement is a problem for employers looking to fill roles.
He said: “What this report makes clear is that the current crisis of older workers leaving the jobs market at an alarming rate is not because the job vacancies are not there.”
Speaking to HR magazine, he added: “What we have instead is a shortage of employers creating jobs with sufficient flexibility to attract older workers, and so many employers are missing out on the well-documented benefits that an age-inclusive workforce can bring."
Managing health conditions or caring responsibilities are the main reasons many older workers may want to work more flexibly he said, adding: “Without the ability to get flexible work, some older workers feel stuck between a rock and hard place, and retirement is seen as the only option.”
According to research by pensions and investment firm Aegon UK, a quarter (25%) of Brits had changed their retirement plans because of the pandemic.
Taking an early pension, however, might not be the best option financially given the current high rate of inflation.
A 60-year-old with a pension of £200,000, will have a retirement income of around £4,900 per year.
By delaying retirement a further year and contributing £200 per month, people could increase their annual pension income by 16% each year, equating to £5,700.
Steve Cameron, pensions director at Aegon UK, said: “While some may not have the choice, individuals considering their future retirement options should consider the benefit of remaining in some form of employment.”
Many workers plan a gradual transition into retirement with flexible or part-time work, he added, so it is vital employers give them that option.
Speaking to HR magazine, he said: “Many will have been relying on these later years to boost their private or workplace retirement savings.
“Continuing to work in later life, even part-time, while saving into a pension can make a huge difference to your lifestyle in retirement.”
