The Institute for Fiscal Studies the effect of the pandemic on those nearing the end of their working lives.
In a new Briefing Note, the IFS investigated how workers aged 50 and over have reacted to the pandemic. This has included how their retirement plans have already been affected by the crisis.
What were the findings?
Nearly 25% of employees aged 54 and over who had been working before the crisis were on furlough. Of those who continued to work, 20% were on reduced hours. Among the self-employed aged 54 and over, a third were not working.
Among those who were working only 20% reported they could carry on their work as normal. Five percent of those aged 66–70 and 14% of those aged 71 and older who were working reported being retired. Only half said that they had left work because they were ‘planning to retire around now anyway’. The upshot is that the other half could have forced into ‘early’ retirement.
Thirteen percent of older workers have altered their retirement plans because of the pandemic, with 8% planning to retire later. Five percent planned to retire earlier. The research found there was a low relationship between income and the probability of someone now planning to retire earlier. However, those with the highest incomes are nearly 5% more likely to be now planning to retire later. A similar probability of later retirement applied to those working from home (who tend to be the higher earners).
Surprisingly, the IFS found little difference in the change in retirement plans between those who are clinically vulnerable or extremely clinically vulnerable and those who are not. However, the IFS also notes that the question was addressed to existing employees in June-July. By this time, a considerable proportion of clinically vulnerable employees aged 66 and older had already chosen to retire.
One group the IFS found were more likely to be planning to retire later was those with pension pots which had fallen in value.
How could this affect me?
For anyone thinking about when to retire it is important to know what is possible. We are specialists in showing clients what is possible with their money. When doing this we can discuss the various options open to you and how your money can work as hard for you as possible. Whenever you make an important decision it is important to know the pros and cons of each option. With important financial decisions going through the numbers is essential.