Pandemic fuels 'all-or-nothing retirement plans'

Pandemic fuels 'all-or-nothing retirement plans'

The gap in peoples’ retirement plans has widened as a result of the Covid-19 pandemic, according to research from Hargreaves Lansdown.

The investment platform found crisis had prompted many people to reassess their priorities and while some have come to the conclusion that they want to give up work earlier in life others plan to stay in work full time.

Hargreaves found the number of people who wanted to give up work between the age of 50 and state pension age had more than doubled from 4 per cent before the pandemic to 10 per cent after.

Conversely for those that wanted to carry on working full time the figure increased from 38 per cent to 42 per cent.

Men were more likely to say they want to start a business in their last decades at work, with fewer women wanting to follow this route since the onset of the pandemic.

The number of people unsure of what they want to do between the ages of 50 and retirement meanwhile has fallen from 30 per cent to 24 per cent.

The research was conducted by Opinium for Hargreaves Lansdown across October 2018, 2019 and 2020.

Sarah Coles, personal finance analyst, Hargreaves Lansdown said the pandemic had forced people to make decisions about their retirement.

“While a fifth of people still plan to gradually ease out of the workplace, it has fuelled a rise in all-or-nothing retirement plans," she said.

"Men in particular have cemented their retirement plans, with the number saying they don’t know what they want to do falling by a third over the year, from 30 per cent to 20 per cent.”

She added: “For some people, it has opened their eyes to the compromises their working life has forced on them, so they’re keen to leave it all behind as soon as possible. 

“There has been a huge rise in women who want to stop work altogether, trebling from just 4 per cent the previous year to 12 per cent after they had felt the effects of the pandemic.

“For others, more time at home with their loved ones has reminded them how much they enjoy being out at work. Both women and men are more likely to say they want to work full time up to state pension age now.”

Coles said in a large number of cases the decision had been a financial one.

Big falls in income during the pandemic had forced some people to put less away for the future, or even to start eating into their savings, which means working full time for longer.

“For others, there has been far less control over the decision. The pandemic has forced many older people out of work altogether. The FCA found that almost three in five – 58 per cent - people who retired between March and October 2020 did so because of Covid-19," Coles said.

Darren Dicks, head of wealth management at Age Partnership, said: “Since February we have seen a marked increase in the volume of clients getting their retirement plans back on track.