There has been a fundamental shift in UK retirement patterns in recent years

Noel Butwell

Noel Butwell

If you asked a cross section of the British public about their retirement plans 20 years ago, you would have heard the same thing from most people.

The trajectory of working life was, for the vast majority, set. You worked hard. And then, once you reached a certain age, you downed tools and entered a new chapter of life, with a gold-plated defined benefit pension to draw upon. For many, this was also the end of their relationship with their adviser.

This is no longer the case. While the conventional route of a set retirement is still the goal for many people, there has been a fundamental shift in UK retirement patterns in recent years.

Our recent Class of 2022 report surveyed 1,000 people who were set to retire in the next year, and 1,000 people who had retired the year before. It found that two thirds (66 per cent) of people retiring in the next 12 months plan to continue working once they had retired.

The reasons driving the ‘flexi-retirement’ trend are complex. Some continue to work because it is now easier for retirees to do so on their own terms. Flexible and part-time roles are more common, and the rise of hybrid-working has made sidestepping the commute and working from home normal.

Working in retirement

But we cannot ignore the elephant in the room. A significant proportion of people are choosing to continue to work out of necessity. A third (32 per cent) of soon-to-be retirees are planning to continue working in retirement because they need the money.

Saving enough has always been a concern. However, the last 15 years have been characterised by the move away from DB pensions, along with periods of economic uncertainty. We have moved from one global crisis to the next, and this has affected people’s ability to save, and for some, the value of their assets has fluctuated.

Record levels of inflation are today’s biggest challenge. Only 15 per cent of the people we spoke to for Class of 2022 have considered how their savings can outpace inflation. And for people near or in retirement on a fixed income, the rising cost of living is a significant development.

Advisers are stepping up to the plate to support this group. They are helping them to review investment allocations, carry out cash and income planning and, for those that want to supplement their income by working in retirement, understand what it will mean for their finances long term.

This support underlines why financial advice has never been more important. The bespoke, relationship-led services advisers offer are lasting longer and have helped many people navigate the disruption created by the pandemic. It will be the same expertise and commitment that advisers will use to support their clients to thrive in a world where ‘flexi-retirement’ is the norm.

This is why it is essential that we, as an industry, do everything we can to improve the provision of financial advice in the UK. Worryingly, less than a fifth (18 per cent) of the people we spoke to for Class of 2022 have sought advice from a professional to prepare for retirement.