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Rising bills
High inflation is “ruining” retirements and forcing thousands of people to return to the workforce, according to Age UK.
The charity said the cost of living crisis is “driving a coach and horses” through the retirement plans of older people, pointing to data showing that thousands of under-65s have returned to work.
The number of under-65s who have retired has fallen by more than 100,000 in a year, according to data from the Pensions Policy Institute (PPI), suggesting older people are returning to the workforce or delaying retirement.
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Pensions grid
One would-be retiree told Age UK: “I had to take early retirement May last year to help care for my mother with dementia. Due to increases in fuel and all utilities I have been forced to get a part-time job to supplement my work pension.”
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Another said: “The only time we used the heating during last winter was at Christmas. I am working but my wages would not cover the cost of heating my house and leave enough to buy food and cover the other bills that are also rising.
“I am due to retire in September 2024 but unless there is a big change, I cannot see this being possible.”
More older people are also having to dip into their defined contribution pensions to stay afloat, which will reduce their income when they do eventually retire.
The PPI study found that the number of workers needing to dip into their retirement savings this year increased by 18pc.
Modelling showed that someone on the National Living wage would need to find £26,000 to support themselves at their usual standard of living if they left work for two years, and a higher earner may need around £60,000, with some opting to take this money from their pension.
John Adams, senior policy analyst at the PPI, said: “Pulling money out of pension savings early could have serious consequences for retirement income.”
Chancellor Jeremy Hunt made a push to get early retirees back in jobs a key part of his Budget in March.
The PPI report showed that the number of people under the age of 65 in retirement was 1.075m between February and April, down from a high of 1.196m nine months ago and 1.180m during the same period last year.
A survey by Opinium for Age UK in January found that among 60 to 65-year-olds, 9pc said they or someone else in their household had recently had to change their work habits.
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How much income you need for retirement
Caroline Abrahams, director at Age UK, said: “The cost of living crisis really is driving a coach and horses through many older people’s retirement plans, especially those without much money behind them.
“There’s growing evidence that some are having to postpone retirement because they don’t have enough money coming in to pay the bills.”
She said there needed to be more generous financial support for people who cannot keep working until state pension age.