A recent report, published by MoneyAge, confirms that the cost of living crisis is forcing retirees to rethink their retirement.
As household bills and energy costs rise, 10% of retirees are returning to the workplace. This number includes those who have already returned to the workplace, as well as those who plan to do so if the crisis continues.
The coronavirus pandemic, followed by soaring inflation, is causing financial worries for millions of retired Brits. And while the specific set of circumstances that have led to the current cost of living crisis might be unique, the concept of “unretirement” isn’t a new one.
Keep reading to find out what unretirement is, its pros and cons, and how financial planning might help you to avoid it.
The cost of living crisis is leading to rising unretirement
While the latest figures from the Office for National Statistics (ONS) confirm that inflation for August dropped from its 40-year high of 10.1%, the cost of living crisis continues.
With inflation at 9.9%, and energy bills set to rise despite the prime minister’s recently announced cap, millions of UK households are struggling.
If you are already retired, this might be a particularly difficult time.
The State Pension triple lock will increase your income in April but raising additional income in the meantime is a challenge. Even if you are not financially struggling yourself, you might be offering support to loved ones and that will only get harder in the short term.
This stretching of pension income is forcing some to undo their plans and return to work.
Some might be doing so for non-financial reasons too, like boredom and a need for greater social contact. But this won’t be the case for everyone.
In fact, a recent Guardian article confirms that 70% of those returning to work said they were “unretiring” purely or partly for financial reasons.
3 simple steps to consider before opting for unretirement
1. Think carefully about the retirement you want… before you retire
Unretirement can be a great option for some, even if it’s not a financial necessity. You might be able to avoid it, though, by having a clear idea of what your retirement will look like before you reach the big day.
You’ll need to think about some key questions, including:
- When do I want to retire?
- What do I want my retirement to look like?
- How much will this cost?
Answering these questions will help you to plan your retirement the way you want it. At Fingerprint Financial Planning we can help with this, so get in touch.
2. Consider whether a phased retirement might be a “best of both”
There’s nothing wrong with returning to work after retirement if it’s what you want. But a good retirement plan can factor work into your retirement from the outset.
The traditional “cliff-edge” retirement is still the best option for some, but these days many others are opting for a hybrid approach.
Rather than going from full-time work to full-time retirement, phased retirement can allow you a steadier transition into life after work. This can help financially, as well as help to maintain your wellbeing through continued social contact and avoid the trauma of the sudden end to a career-long routine.
3. Understand why you want to unretire before you take the plunge
The rising cost of living is a major factor in unretirement, but it isn’t the only one.
The Covid pandemic has shown many people new ways of being employed. Maybe remote working has become an option in your profession since you retired? This might mean that a return to work is a different proposition now than it was pre-pandemic.
This could have financial and social benefits. Remember that if you spent your career in one area, you could have invaluable skills to pass on. You aren’t tied to returning to work in your former capacity.
If your decision to return to the workplace isn’t a financial one, consider whether volunteering might fill the gap left by paid work. This way, you could stay socially and physically active while giving something back to the community.
Get in touch
While unretirement is on the rise, staying in some form of work post-retirement doesn’t have to be a decision you make out of necessity. Get in touch and speak to us about planning your retirement your way.
Get in touch by emailing hello@fingerprintfp.co.uk or calling 03452 100 100.
Please note
The value of investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
